Housing shortages do not happen by accident. They are often the result of policies that reduce the supply of buildable lots and new homes. One of the most disruptive of those policies is the residential development moratorium. When a city or county suspends the acceptance or approval of rezoning, subdivision, or land development applications, the pipeline of future neighborhoods immediately begins to dry up. Builders cannot purchase finished lots that do not exist, and families cannot buy homes that are never built. As supply shrinks while demand continues to grow, prices inevitably rise. It is a lesson as old as economics itself: scarcity increases value.

The consequences extend far beyond higher home prices. A landowner who has spent years preparing property for development can suddenly find that opportunity taken away with little or no warning. Contracts expire. Financing costs continue. Engineers, surveyors, and attorneys have already been paid, yet projects are forced to sit idle. the owner receives no compensation for the lost time or the diminished value created by the government’s decision. A moratorium may last months or even years, but the carrying costs never stop. While governments face few financial consequences for delaying growth, landowners often bear the entire economic burden.

Equally troubling is how many moratoriums are adopted. In numerous communities, there are no objective standards defining when a moratorium may be imposed, how long it may last, or what measurable conditions must exist before it can be enacted. It can appear that a governing body decides at one evening meeting that growth has become unpopular and, within hours, development comes to a standstill. Such decisions create uncertainty for property owners, lenders, builders, and future homebuyers. Markets function best when the rules are predictable. Housing becomes more expensive when investment is governed by uncertainty instead of established law.

Communities certainly have legitimate concerns about roads, schools, utilities, stormwater systems, and public services. Those issues deserve thoughtful planning and responsible investment. But stopping new neighborhoods is rarely the only—or even the best—solution. Infrastructure improvements, impact fee adjustments, utility expansions, capital improvement planning, and updated development standards can all be implemented while approved neighborhoods continue moving through construction. Growth does not have to stop for communities to solve problems. In fact, the economic activity generated by new development
often helps provide the tax base needed to address those very concerns.

As I wrote in Zoned Out, “The solution to growth is not to stop growing; it is to plan for growth.” Moratoriums create artificial scarcity, increase housing costs, and place the financial burden of public policy on individual property owners. Except in narrowly defined emergency circumstances, they should not be used as a growth management tool. Communities can—and should—address infrastructure, planning, and public service challenges while neighborhoods are being built, ensuring that tomorrow’s families are not priced out of homeownership by today’s delays.