“Zoning is not a good institution gone bad. … On the contrary, zoning is a mechanism of exclusion designed to inflate property values, slow the pace of new development, segregate cities by race and class, and enshrine the detached single-family house as the exclusive urban ideal.” So writes M. Nolan Gray in Arbitrary Lines: How Zoning Broke the American City and How to Fix It.
This quote is a strong condemnation of zoning. Does Gray, a scholar affiliated with the Mercatus Center, successfully make his case? He does. I confess that I was somewhat convinced of this before cracking the book. Decades ago, I read a 77-page article by legal scholar Bernard Siegan, who made the case that Houston, the one major city in America that had avoided zoning, was doing well. Gray is quite familiar with Houston and, indeed, devotes a whole chapter to laying out in what ways Houston does well.
Gray does much more than simply discuss Houston. He delves into the history of zoning, which began about a century ago, to show that the racial and class segregation it creates and the property values it inflates are not accidental byproducts of a well-intentioned process gone wrong. They are, instead, what the early proponents of zoning intended. To put it in the current vernacular, for the early proponents of zoning, these bad effects are a feature, not a bug. Gray makes a strong case for making zoning less bad and a further strong case for ending it. Unfortunately, he also recommends that local governments impose price controls on a portion of the new housing stock.
These are the opening 3 paragraphs of David R. Henderson, “The Case for Abolishing Zoning,” my fairly comprehensive review of M. Nolan Gray’s outstanding book Arbitrary Lines. It appears in the Fall 2022 issue of Regulation.
Another excerpt:
When I used to visit my maternal grandparents in their 700-square foot house in Winnipeg in the early 1960s, I would almost always run into their tenant, Mr. Woolridge. He was a nice old retired man who rented a bedroom that was about 40 square feet and shared my grandparents’ kitchen and bathroom. Such arrangements, which Gray calls “single-room occupancies” (SROs), were somewhat common then for low-income owners and tenants. They are now illegal almost everywhere. SROs, notes Gray, served “as the bottom rung of the housing market.” Prohibiting them, he writes, “has served no small role in driving the contemporary homelessness crisis facing cities.”
I have very fond memories of Mr. Woolridge; he was kind of like an extra grandfather. I agree with Gray’s bottom line on this: I think this prohibition is one of the major contributors to homelessness.
Read the whole thing.
READER COMMENTS
MarkW
Oct 8 2022 at 10:19am
He was a nice old retired man who rented a bedroom that was about 40 square feet and shared my grandparents’ kitchen and bathroom. Such arrangements, which Gray calls “single-room occupancies” (SROs), were somewhat common then for low-income owners and tenants. They are now illegal almost everywhere.
I live in a college town, and this kind of arrangement is very common. Many student apartments are rented by the bedroom, where several such students share the common living and kitchen areas (though typically each renter has their own bathroom). This is most common in the newer high-rise student apartments that have sprouted up in the last 10-15 years. AFAIK, there are no ordinances preventing people from renting an room in their house either short-term (as an AirBnB) or long-terms. And back-yard ADUs (accessory dwelling units) are now permitted as well. However, there are few homeowners renting out spare rooms or building ADUs, mainly, I think, because there really aren’t any low-income homeowners here (at least not anywhere near campus).
Pierre Lemieux
Oct 8 2022 at 11:39am
Interesting, David. I was also influenced by Siegan’s book several decades ago.
Thomas Lee Hutcheson
Oct 8 2022 at 12:12pm
Good to see Libertarians paying more attention to improving land use regulations.
Jose Pablo
Oct 8 2022 at 2:25pm
Libertarians are always for improving regulations. By eliminating them. All of them as the by default (significant) improvement.
Thomas Lee Hutcheson
Oct 9 2022 at 2:47pm
Really? Every last one? You are positive that the highest net benefit?
But suppose you are right. Would it still not be better to improve that is there on the way to reducing them to zero? Is the status quo the second best?
David Seltzer
Oct 8 2022 at 5:01pm
Thanks David. I’m reading articles on regulatory capture and rent seeking. I will add Gray’s book to my reading list.
Matthias
Oct 9 2022 at 4:27am
To be honest, it’s really Euclidean zoning that’s really bad.
Japanese zoning (or German zoning etc) isn’t nearly so bad.
See eg http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html?m=1
nobody.really
Oct 9 2022 at 4:33pm
Disney theme parks artificially (?) limit admissions, and the price of admissions has increased hugely. Perhaps coincidentally, perhaps not, there seems to be plenty of demand–and now there are a growing number of competing firms following the Disney model. In contrast, my local Independence Day carnival has no apparent limit on participation–but the accommodations much more modest. Should we condemn Disney for failing to be more like the carnival?
David Henderson
Oct 9 2022 at 5:13pm
You wrote:
No. And I’m not sure why you’re asking. It’s one thing for people and companies to limit their own output–I do that every day, as I bet you do too. It’s quite another for a government to limit other people’s output.
nobody.really
Oct 9 2022 at 9:41pm
For what reason would Disney limit its output? I suspect that they do so because not doing so would alter the quality of the output.
Perhaps zoning laws are designed for the same purpose–to maintain a specific quality. The character of San Fran differs from the character of Houston, and I suspect zoning has something to do with that. If zoning were so terrible, I’d expect people would stop wanting to buy in places with zoning–yet I see no evidence of that. Moreover, if zoning really does impair the value of real estate, then repealing zoning would cause real estate prices to INCREASE.
None of this says that the burdens of zoning exceed its benefits–but none of this refutes it, either. And since I regard the precise bundle of rights that we include in “property rights” as arbitrary (as evidenced by the extent that they change from jurisdiction to jurisdiction, and over time), I don’t regard zoning as more arbitrary than the rest.
Then again, I haven’t read Gray’s book yet….
TMC
Oct 10 2022 at 12:15pm
Right. Single family home streets are more expensive…. because people value them more.
Henri Hein
Oct 10 2022 at 2:06pm
The value of total real estate could easily increase while unit prices fell. Probably you would have a larger range of unit prices, so you would get both cheaper units and more expensive units. If that happens, cheap housing would indeed become less scarce.
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