The problem isn’t demand. Southwest Ohio has jobs, institutions, and proximity to growing metros. People want to live here, despite the weather. The issue is supply has been artificially restricted by layers of regulation, zoning rules, and tax structures preventing the housing market from responding to the demand.
In a functioning market, rising demand causes producers to build more. However, this is curtailed many times in housing from local governments frequently interfering with the free market response. Zoning codes across much of the region still mandate single-family homes on large lots while prohibiting duplexes, townhomes and small apartment buildings. Ultimately, these codes choke competition, limit innovation and inflate costs.
Ohio economists have agreed. A survey of economists in the Scioto Analysis found broad consensus loosening residential zoning restrictions would reduce housing prices over time. Yet many communities continue to enforce rules functioning as government-imposed supply caps.
Springfield illustrates the distortion. According to Zillow, Springfield reported home values appear low compared to national averages but buyers face extremely limited inventory and few modern housing options. The market can’t correct because regulations restrict what can be built and where, leaving home buyers to bid against one another for limited supply. Scarcity is driving prices up. The same pattern is playing out in Butler County where demand tied to regional job growth meets the area’s rigid land-use rules.
The Ohio tax system expounds the housing issue due to reliance on property taxes with a fragmented local government system across hundreds of overlapping taxing authorities. The Buckeye Institute, a Columbus-based policy think tank, has consistently pointed out Ohio’s complex tax structure places upward pressure on property taxes, increasing the cost of owning and renting homes and discouraging housing development. High property taxes push up monthly costs and do influence housing development.
Compounding the issue, restrictive zoning codes combined with tax incentives fuels urban sprawl. Builders are blocked from adding density in existing neighborhoods, causing developments to be pushed to the outskirts converting farmland and increasing infrastructure costs for roads, water, and sewer systems. These costs are all borne by taxpayers.
Also, the human cost of these policies is mounting. The Dayton Daily News reported nearly one in five renters in the Dayton region is severely cost-burdened from spending more than half of household income on housing. According to the Coalition on Homelessness and Housing in Ohio, the Buckeye State faces a shortage of hundreds of thousands of rental units affordable to extremely low-income households. When housing consumes so much of a family’s income they have less to invest, save, or spend in the local economy.
Capitalism works when prices reflect real costs and competition is allowed to function properly without governmental interference. If policymakers want housing affordability, they should stop constraining supply and start trusting the housing free market.
Legalizing more housing types, streamlining permitting, reducing unnecessary regulatory costs, and reforming tax structures smothering development are major steps on the region’s housing issue.
Rob Scott, a Republican, is the Kettering Clerk of Court, attorney, and small business owner. Contact him at rob@robscott.us.