Cancel Zoning

If we want to fix the housing-affordability crisis, segregation, and sprawl, zoning must go.

Until recently, zoning was a sleepy backwater in the policy world. The mere thought of a weeknight hearing or a 700-page ordinance was once enough to make even the most eager wonk’s eyes glaze over. If a layperson knew anything about zoning, chances are she didn’t have an opinion about it. The rules dictating where and how Americans lived and worked attracted curiously little attention.

A decade of urban upheaval has changed all of that. Amid ongoing crises of housing affordability, inequality, segregation, and sprawl, fixing zoning has emerged as a cause célèbre. Over the past decade, the Obama, Trump, and Biden administrations have all vowed to take on zoning reform. National outlets now regularly decry the evils of zoning. And local YIMBY groups across the country are rewriting old ordinances. For the first time in 100 years, the arbitrary lines that divide up the American city have become impossible for the average person to ignore.

Of all the problems that zoning causes or exacerbates, none has attracted greater attention than the cost of housing—and for good reason. In 2021 alone, home prices rose by nearly 20 percent. Over the same period, rents also skyrocketed, prompting fears of a surge in homelessness. Once contained to the coasts, the crisis is spreading inland; home prices in previously affordable cities have hit record highs. Researchers across a range of disciplines now broadly agree that bad zoning policies are in no small part to blame.

Boring though it may be, zoning has real-world effects that are dire. Between mandating parking garages and banning apartments, it has made infill development prohibitively difficult in many American cities. And in suburbs across the country, it has made the starter homes we so desperately need—think townhouses and homes on small lots—effectively illegal to build. If Americans want a fairer, more prosperous nation, zoning has got to go.

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The housing-affordability crisis is, at its most basic, a problem of supply and demand: A lot of people need homes, but not enough are being built, resulting in rising prices for existing supply. New homes aren’t going unbuilt because of developers’ ignorance or a lack of land—developers are desperate to build in expensive cities, and they can always build up when they can’t build out. Instead, homes are going unbuilt because of zoning.

In nearly every major U.S. city, apartments are banned in at least 70 percent of residential areas. San Jose prohibits apartments in 94 percent of its residential areas. The most a developer can build in these zones is a detached single-family home.

Beyond apartment bans, a host of other zoning regulations limit housing supply. Rules such as height limits, minimum setbacks, and floor-area ratios curtail the development potential of most residential areas. In San Luis Obispo, the “High-Density Residential” zone—the most liberal residential district in the city—limits buildings to a 35-foot height and mandates large lawns. Where apartments can be built at all, these specifications mean the complexes won’t host many units.

Apartments aren’t the only type of housing snarled by zoning. In cities, many zoning codes ban single-room occupancies (SROs)—better known as boarding or rooming houses—in which residents rent a furnished private bedroom with a shared kitchen and bathroom. Where they’re allowed, SROs serve as a housing safety net, providing exceptionally affordable accommodations to low-income singles. In the postwar period, however, many cities—including New York—modified their zoning to ban them.

Manufactured homes⁠—trailers or mobile homes⁠—once filled a similar niche in suburban and rural communities. Yet, as with SROs, many zoning codes ban manufactured housing. In fact, some Florida municipalities incorporated themselves specifically to prohibit it.

The supposed rationale for many of these zoning rules—where planners even bothered to come up with one—was to improve the lives of the poor by putting a floor on housing markets. No one wants to live in a small apartment, SRO, or trailer park, the thinking went. Who wouldn’t want a big yard, private kitchen, and large home?

But banning affordable housing doesn’t make expensive housing more accessible. By putting a floor on housing markets, zoning has merely locked out everyone who cannot clear that floor. It’s a system that puts those with means on a treadmill of ever-rising rents, and puts those without means on the streets. Absent zoning reform, the situation is only going to get worse.

For every zoning rule prohibiting new housing, a half-dozen rules inflate the prices of the housing that actually gets built.

Consider minimum lot sizes, which require developers to set aside a certain amount of land for each home. These rules are common in single-family zoning districts, where lot size is a keydriver of costs. Although they serve a health-and-safety function in rural areas—where, for example, sewer hookups may be unavailable—these rules serve no such purpose in most cities and suburbs. Ample research has shown that minimum lot sizes are a major culprit for rising housing costs.

To see how this works, imagine a three-acre plot of suburban land. Let’s assume that regulations require a quarter of it to be set aside for streets and a small park—fair enough. After a market study, a developer finds strong demand for homes on 5,000-square-foot lots. The size of the plot should allow her to develop 19 such homes, but there’s a snag: Local code imposes a minimum lot size of 7,500 square feet. Thus, she can build only 13 homes, all of which must be more expensive to cover the land costs. At best, the community is left with 13 expensive homes. At worst, this market can’t yet sustain the higher price point, and no homes are built.

Minimum parking requirements do similar damage in cities. These mandate that for each new unit of housing, a developer must also build some number of off-street parking spaces. While developers have both the incentive and local knowledge to determine how much parking a project requires—too few spaces and the units won’t sell; too many spaces and the developers waste money—minimum parking requirements supersede their judgment with often-arbitrary standards.

In my hometown of Lexington, Kentucky, for example, a single-family home must provide one off-street parking space. But a duplex must provide four. And an apartment building must provide 1.5 spaces per unit or 0.9 per bedroom—whichever is greater. In other words, the city’s zoning mandates more off-street parking for the kind of housing—urban and affordable—whose residents are least likely to own a car. Call that what you will, but it’s not planning.

As with minimum lot sizes, minimum parking requirements effectively demand that each resident consumes more land. If Lexington’s minimum parking requirements were applied to a 675-square foot, two-bedroom apartment, for example, they would double the amount of space that each resident is forced to consume. Even where land costs are low, this won’t come cheap.

The cost of these mandates quickly escalates when land constraints require structured parking, such as an above- or belowground garage. In Miami or New Orleans, for example, creating new spaces for cars may entail a parking podium that towers over the street. In cities such as D.C. and Los Angeles, it may involve extensive excavation. In either case, residents bear the cost: One estimate puts the per-unit added cost of structured parking at about $50,000, which would increase the cost of a $150,000 condo by a third. At best you get a more expensive home. At worst, the project proves too expensive for developers, and you get nothing.

Why did zoning get so restrictive? Until recently, zoning constituted a relatively minor check on overall housing construction. Through World War II, many American zoning codes remained flexible by modern standards, even though they were often designed to be exclusionary. Land-use categories remained broad, density restrictions were largely limited to height and lot coverage, and most development occurred without much fuss.

This has unraveled over the past 50 years, as cities and suburbs across the country have aggressively expanded use segregation, tightened density rules, and imposed months of additional public review.

What changed? The most compelling theory holds that a mixture of rapid inflation and generous federal-tax policy encouraged homeowners to treat their house as an investment, providing a strong incentive to oppose new construction.

If true, this suggests a bleak future for zoning. The most powerful voices in local housing debates are those of incumbent homeowners. If they see zoning regulations as a means to inflate their biggest investment—the value of their home—the prospects for reform are slim. Even when local policy makers manage to change codes, they will face continual opposition. Their victories are unlikely to last.

It doesn’t have to be this way. In cities like Minneapolis and Hartford, local YIMBY groups have abolished zoning policies such as minimum parking requirements. In states like California and Oregon, policy makers now heavily restrict the ability of local governments to ban apartments. At the federal level, bills with unsubtle names such as the “Yes In My Backyard Act” and the “Build More Housing Near Transit Act” are winding their way through Congress. If passed, they would tie coveted federal dollars to zoning liberalization, providing a needed check on local NIMBY impulses.

But why settle for reform? What if we abolished zoning altogether?

Consider America’s lone unzoned major city. Houston twice put zoning to a citywide vote, where it lost because of opposition from working-class voters of all races. As a result, land-use regulation in Houston is largely focused on regulating actual nuisances, like noisy neighbors or slaughterhouses; the city’s few zoninglike regulations, such as minimum lot sizes and parking mandates, are on the way out. Blocks that want stricter rules can voluntarily opt into them through private deed restrictions. But they can’t just show up at public hearings and shout their preferences into law.

The results speak for themselves. Houston builds housing at 14 times the rate of peers like San Jose. And it isn’t just sprawl: In 2019, Houston built roughly the same number of apartments as Los Angeles, despite being half its size. Since reforms to minimum-lot-size rules were put in place in 1998, more than 25,000 townhouses have been built, overwhelmingly in existing urban areas.

To be clear, Houston has made its share of planning mistakes. But, free of zoning, the city can constantly remake itself. That Houston is now one of the most affordable and diverse cities in the country is no accident.

Even in a post-zoning world, we will need planners to facilitate subsidized housing, protect natural areas, and map out safe streets and parks—all issues where Houston is improving at a faster clip than most American cities. Perhaps if planners weren’t compelled by zoning codes to micromanage strip malls or keep fourplexes out of cul-de-sacs, they could do some actual planning.

Zoning hasn’t worked. Hopefully one day soon, when we devise a system that does, we can all go back to ignoring it.

SOURCE: https://www.theatlantic.com/

AUTHOR: M. Nolan Gray