THERE'S A HOUSING CRISIS PERCOLATING in cities, towns, and neighborhoods across the country. It's hidden behind the euphoria of extremely favorable mortgage rates and beneath the robust housing market and the highest percentage of homeownership this country has ever seen.

It is a crisis that smacks of ethnic and racial discrimination and economic bigotry. It is fueled by the current rash of down zonings and exclusionary land-use practices that are being implemented in the name of curbing “overdevelopment” and sprawl. These antigrowth policies, often developed under the guise of smart growth, cause housing shortages that bring real hardship to families, especially low- and moderate-income families who lack the resources to find adequate housing in a market in which demand exceeds supply. Restrictive policies that do not provide adequate housing are not smart growth.

Supplies Are Limited These land-use decisions are severely limiting the supply of housing. And, when combined with low mortgage rates, they are pushing home and, in many markets, rental prices far beyond the reach of the fastest-growing segments of the population—working families, minorities, young singles, and immigrants. As a consequence of ever-increasing prices, these populations are finding it harder to establish themselves in decent housing. If they are lucky enough to have housing, they are at risk of being displaced from closer-in neighborhoods (sometimes, their own longtime neighborhoods) and find themselves having to commute greater and greater distances to work at greater and greater expense. Government policies in place in many market areas, New Jersey being one glaring example, are having the effect of encouraging both the primary and secondary displacement of the most impacted populations, with gentrification being the unstated, but clear, goal.

Yes, the white-hot housing market itself is contributing to the crisis, but don't be fooled—it is only part of the picture. The local and state officials who make the zoning decisions can alleviate it by implementing corrective zoning actions—which would involve some measure of political fortitude. Right now, however, most are more than content to give lip service to “affordable housing” and leave it at that.

This housing crisis affects every part of the market—affordable, move-up, and luxury are all feeling the pinch. It makes no difference. There may be subtle nuances to the land-use dynamics in different locales or market segments, but the end results are the same. The front door is only open to some and usually not the ones who need housing the most.

Land Locked Let's start with land. In suburban markets, the scenario is fairly familiar. Less land is available for development because of any number of conservation/limited-growth–type programs such as farmland preservation, green acres, and the like. That makes the price of available land, well, pricey, which adds to the cost of the home on that land. Now, factor in the number of homes that can be built on that land. Reduced densities—the product of down zonings and exclusionary land-use practices—restrict the amount of growth allowed on these remaining developable parcels, edging up prices higher still. It is fairly clear to almost anyone, except local politicians and land-use officials, that a steady and often increasing demand for housing, when applied to a decreasing supply of developable land and density, leads to ever-increasing prices and decreasing affordability at every level. But it clearly has the greatest effect on the aforementioned fastest-growing segments of the population—working families, young singles, minorities, and immigrants.

The combination of all these factors means mounting pressure on a smaller supply of new housing, resulting in increasingly higher prices. One only has to look at the suburban markets in metropolitan areas such as New York, Washington, and Portland, Ore., to see how this pattern of land use is affecting housing prices.

City Slickers There's no relief within cities either. Sure, there's development taking place, and cities are being revitalized. One by one, homes in neighborhoods are being condemned and then rebuilt. But all this energy isn't focused on providing a broad range of housing across the economic spectrum. Instead, the cities are “gentrifying,” successfully luring back middle- and upper–middle-class home buyers who can afford to be closer to their jobs and add to city coffers. Again, lost in the shuffle are the usual suspects: those who cannot afford moving into the city, as well as displaced city residents who would find themselves too house poor to continue living in their old neighborhoods. They have no place to go except less desirable neighborhoods. And the cities themselves actively increase their culpability, adding to the costs of housing, by promoting and maintaining gold-plated building codes and by insufficiently funding and staffing administrative processes.

You can count younger people and senior citizens among the newly segregated people being priced out of decent, affordable housing, too. Younger homeowners haven't built up enough equity and don't have the income to afford today's prices, and senior citizens can't find appropriate housing in their income levels.