Downzoning Chicago: How Local Land Use Policy Has Reduced Housing Construction and Reinforced Segregation

In the postwar United States, cities used downzoning policies to limit construction, often for the sake of preserving neighborhood aesthetics and protecting property values. We show that downzonings in Chicago between 1970 and 2016 were more frequently implemented in high home value areas. We evaluate downzoning’s consequences by comparing outcomes between Chicago tracts that were subjected to this regulatory change and those that were not, using fixed-effects regressions. In downzoned areas, housing supply declined, but housing values and white population shares increased. Overall, downzoning has contributed to reduced housing availability in high-demand neighborhoods, while reinforcing class and racial segregation.