How Zoning Affects Your Home, Your City, and Your Life (a book review)

As you drive, walk, or bike around your city, what do you think about as you see the various buildings and other structures? Perhaps you think about the lives of the people in them, or the architecture of the buildings themselves, or the products and services that the businesses offer for sale. For me, lately I’ve been thinking about one thing as I make my way around town: zoning. It’s not something I had thought about before very much, but after reading Nolan Gray’s new book Arbitrary Lines: How Zoning Broke the American City and How to Fix It, I’ve been thinking about zoning a lot more.

(Disclosure: I know the author of the book, but I paid for my own copy and got it in advance through the luck of the Amazon-pre-order draw.)

The book does a wonderful job of explaining what zoning is (and importantly, also what it is not), where zoning comes from historically (it’s a development of the early 20th century), and how zoning affects our cities. I really like the way that the book encourages the reader to be a part of the story of zoning. In Chapter 2, Gray encourages you to put down the book and locate your city’s zoning map to learn more about how zoning impacts your life.

I immediately did so and had no trouble finding zoning maps for the city I live in, Conway, Arkansas. Conveniently, my city provides both a simple PDF map and an interactive map, which provides a lot more detail. The interactive map even has embedded links with historical information on different pieces of property. For example, I found the ordinance for when my college, the University of Central Arkansas (previously Arkansas State Teachers College), was annexed by the City in 1958. Pretty cool!

Looking over the map, it’s pretty clear that most of the city that I live in is covered by R-1 and R-2 zoning. But what exactly do these designations mean? You can probably guess that “R” designates residential, but what does it proscribe about land use?

For that, you must dig into the zoning ordinances. And as Gray cautions in the book (somewhat tongue-in-cheek), you might not want to get in too deep with your zoning ordinances, since they can run hundreds or thousands of pages. But I was brave enough to do so, and located my zoning code online (the PDF runs a modest 253 pages).

What did I learn about the zoning that covers my city?

Continue reading

“Zoning Taxes” — The Cost of Residential Land Use Restrictions

Fascinating new working paper on why housing prices are so high in some markets, by Gyourko and Krimmel: “The Impact of Local Residential Land Use Restrictions on Land Values Across and Within Single Family Housing Markets.”

Key sentence from the abstract: “In the San Francisco, Los Angeles, and Seattle metropolitan areas, the price of land everywhere within those three markets having been bid up by amounts that at least equal typical household income.”

Economists, libertarians, and more recently “neoliberals” have long complained about land-use restrictions as a primary factor contributing to unaffordable housing. This paper provides some pretty solid data, at least for some housing markets.

Here’s a key chart from the paper, Figure 5. Notice that there is a lot of heterogeneity across cities. In San Francisco, land use restrictions add roughly four times the median household income to the price of housing. But in places like Columbus, Dallas, and Minneapolis, there is essentially no zoning tax. That’s not because these cities have no land use restrictions! It’s just that they aren’t currently binding.

The paper also notes that “zoning taxes are especially burdensome in large coastal markets.”

This is similar to what I showed in a very non-scientific map that I created (in about 5 minutes) for a Twitter thread that I wrote in January 2020 on housing prices. In that map and thread I pointed out that there are still lots of fine US cities where you can purchase homes for roughly 3 times median income (a commonly used rule of thumb for affordability).

Image
Cities where you can buy the median house for about 3 times median income.

Will these cities continue to be affordable in the future? As demand increases, and supply-side restrictions remain in place, we would predict the same thing will happen to Columbus as happened to San Francisco. But probably not for decades.

So if you seek housing affordability, move to the Zone of Affordability! But let’s also work on reforming the rest of the country to make everywhere affordable.