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ECONLOG POST
Sep 21 2022
deed restrictions, externalities, Houston, M. Nolan Gray
27
Scott Sumner
Houston is the only big American city without zoning. Some people argue that Houston is effectively zoned, as many neighborhoods have deed restrictions that limit development. But in his new book on zoning, M. Nolan Gray points out that only 25% of Houston is covered by those contracts, and even in those cases the restrictions are less rigid than with explicit zoning laws. So how are things playing out in Houston?
For the most part, Houston’s positives are linked to its lack of zoning, and its negatives are essentially unrelated to zoning. Many people visualize zoning as somehow protecting people from negative externalities. In fact, regulations against public nuisances have been around long before zoning was first adopted in 1916 (in NYC and Berkeley), and even Houston has many such rules. Here’s Gray describing Houston:
Pursuant to city regulations, slaughterhouses—an early zoning boogeyman—must remain 3,000 feet from the nearest resident; oil wells cannot be within 400 feet. Strip clubs and other adult-oriented businesses cannot be within 1,500 feet of a school or church; liquor stores and bars cannot be within 300 feet (Evidently, lust is more offensive than gluttony.) And the location of billboards is heavily proscribed throughout the city.
So how does Houston benefit from a lack of zoning? Think about how cities were built before zoning was created. The densest area (say Manhattan) is in the center, with high-rise office buildings. A bit further out (say Brooklyn) you have townhouses and big apartment buildings. Even further out (say Long Island) you have lots of single-family homes.
After zoning was adopted and then made much more strict over the following decades, this natural growth pattern was artificially halted. In a free market, central Los Angeles would have many more large apartment and condo buildings.
Central Houston has evolved more naturally than Los Angeles, as the city has grown into one of America’s largest metro areas (with roughly 7 million people, 2.3 million of which live right in Houston.) In central Houston, residential lots with one old ranch house are rapidly being converted into three modern townhouses. Lots of large apartment buildings and condos are also being built on the near west side. The city is continually being remade, in a style appropriately reflecting its growth into a major city.
In the tweet below, you can see how in just two decades Houston’s permissive permitting rules allowed a residential neighborhood to become much more dense.
You might be thinking, “But I like single family homes with a large lawn.” In that case, I have good news for you. In a free market like Houston there are still plenty of such neighborhoods (and far more in the suburbs.) At the same time, the market is telling us that there are plenty of people who prefer living in dense neighborhoods near the center of major urban areas. Unfortunately, most zoning plans make such neighborhoods illegal.
Not all of Los Angeles County should look like Brooklyn. But LA deserves a Brooklyn-like area close to its major job centers.
Houston is not as attractive a city as LA (or even Austin.) It’s hot, humid, flat, prone to flooding, and (AFAIK) has the world’s largest collection of petrochemical facilities. Yet despite all of those negative characteristics, lots of people move to Houston each year. (Both affluent and working class migrants.) That’s partly due to its housing policies, which keep prices reasonable despite the extraordinary growth in population.
PS. Houston has had three referenda to allow zoning, and it was rejected all three times. Gray suggests that this is partly because working class voters tended to oppose zoning, and more affluent neighborhoods were bought off with the promise that private deed restrictions would continue to be enforced. In American politics, one never achieves anything without compromise.
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READER COMMENTS
Michael Rulle
Sep 21 2022 at 8:01am
I have been to Houston several times——and there is a different feel to it versus most other cities. What I am most aware of is the price of housing and the distribution of neighborhoods——from low to upper class. For sure, I cannot notice anything wrong with it—-except the heat in summer. It is also a diverse city——and not unlike other cities votes mostly democratic.
If I ever had the time, I would enjoy studying how NewYork City evolved under Robert Moses versus how Houston evolved——-although the time frames were far different—as NY is much older in its development.
I raise Moses’ name because he was a phenomenon. He figured out how to control almost the entire infrastructure budget of New York and Nassau. For sure, he created the opposite of a “city without zoning”. He could not be fired and controlled the city from Al Smith to Nelson Rockefeller. How did he exercise so much power?
He forced The Dodgers out of ~NY (and in their the tale, the Giants too) despite overwhelming support to keep them. He wanted them to move to where Citi field/Shea was built. O’Malley was famous for saying “we are the BROOKLYN Dodgers”.
A 22 year old councilwoman in LA stayed in contact with O’Malley and offered them the swamp called Chavez Ravine. 7 years of negotiation with Moses failed. Moses wanted to build a Penn Station of Brooklyn where the Dodgers wanted to build. Ironically, it is where Barclays Stadium now stands.
My point is NY is an absurdly expensive city to build, controlled for decades in large part by the Mafia as well—and I have wondered how much Moses was the cause. Later—-he was accused of being a planner with a racist agenda—-don’t know about that.
I think of Houston as the anti-New York. And my hypothesis is Moses was the cause of much of NY’s problems——and perhaps some of what is good.
David S
Sep 22 2022 at 4:51am
If I remember the Power Broker correctly Moses had no impact on zoning regulations in the NY metro area but a profound impact on transportation systems. Moses built highways, bridges, and tunnels that helped make automobile traffic the dominant travel method.
In architecture and urban planning circles there is a popular–and deeply flawed– theory that Moses was part of a vast conspiracy that killed trains, walkable neighborhoods, and the vibrant urban density that distinguished American cities like NY prior to the 1950’s. Zoning regulations are part of this conspiracy theory, but their promulgation seems to be more grass roots than road planning.
Houston, in many respects, disproves aspects of these conspiracy theories by being automobile dominant and capable of sustaining market driven density in many neighborhoods.
robc
Sep 21 2022 at 9:56am
Not all of Los Angeles County should look like Brooklyn. But LA deserves a Brooklyn-like area close to its major job centers.
Or my preferred version:
SF (San Fran) should look like Manhattan. Manhattan should look like SF (sci-fi).
Mark Brophy
Sep 21 2022 at 3:26pm
Downtown SF has many tall buildings, it looks like Manhattan but Golden Gate Park has short buildings due to zoning whereas Central Park has tall buildings.
robc
Sep 21 2022 at 3:41pm
Large swaths of SF are single family homes with land values three times the building values.
Without zoning, they wouldn’t exist.
robc
Sep 21 2022 at 3:44pm
For example, the entire Sunset District should be bulldozed and replaced with 9 story condo buildings.
robc
Sep 21 2022 at 9:58am
Best (or worst, depending on your view) of Houston’s lack of zoning, is the roller coaster just a few feet from a residential window. Assuming either is still there.
Pierre Lemieux
Sep 21 2022 at 11:21am
Scott: A related point: at the origin of zoning in 1916 was the desire to keep immigrants and blacks from white neighborhoods; much of its following history had similar purposes. See Jonathan Rothwell’s A Republic of Equals and my Regulation review of the book. Free markets order these things better.
Mark Brophy
Sep 21 2022 at 3:28pm
The rich people on Fifth Avenue didn’t want to live near the poor people working in the garment district.
Scott Sumner
Sep 21 2022 at 2:50pm
Everyone, Good points.
Dylan
Sep 21 2022 at 5:04pm
You might be thinking, “But I like single family homes with a large lawn.” In that case, I have good news for you. In a free market like Houston there are still plenty of such neighborhoods (and far more in the suburbs.)
I favor the more laissez-faire approach of Houston. I illegally moved into an area zoned for manufacturing years ago, partially because I prefer that environment and having industrial neighbors. However, I think it is important to note that besides single family homes and large lawns, another thing that people tend to like is not moving every few years. I feel a lot of what housing policy does is ensures that things don’t change that quickly.
A few years after I moved in the neighborhood was defacto rezoned, which means a bunch more people moved in and a bunch of manufacturing businesses moved out. The neighborhood is no longer as appealing to me as it was when I moved in. If I had the power to wave a wand and freeze the neighborhood in amber as it was in 2011, I’d be tempted.
Scott Sumner
Sep 22 2022 at 2:56pm
I’d like to freeze in place the rotary telephones of 40 years ago, with no iPhones and no touch tone phones. When you called a company with a question, a human being would answer.
But I don’t wish to force my preferences on others.
Dylan
Sep 23 2022 at 5:40am
The point is:
Lots of people don’t have a problem forcing their preferences on others
When a large group of incumbents have a shared set of preferences they can often find a way to lock those preferences in place. Sometimes through market oriented solutions and sometimes political.
I’d like to freeze in place the rotary telephones of 40 years ago, with no iPhones and no touch tone phones.
I could support this. Interesting choice of example though, in that it is typically viewed that the government action of breaking up AT&T is what led to the extreme innovation that we’ve witnessed in telecom over the last 40 years. I don’t know enough about the topic to know if that perception is accurate.
nobody.really
Sep 21 2022 at 6:34pm
According to the Harris County Flood Control District, Harris County (home to Houston) experiences a major flood roughly every other year. If I recall correctly, Houston designated areas for stormwater to impound—but did nothing to stop building developers from continuing to build houses there.
Rain falls fairly evenly across the county—yet, oddly, not everyone’s property is equally prone to flooding. It appears that some people have the temerity to put impervious surfaces on their land, resulting in their share of rain getting dumped onto another (lower) person’s property, causing flooding.
You might buy property that is designated free of any flood zone. But that designation is based on the current state of impervious surfaces around your property (among other things). When those surfaces subsequently get covered in pavement and roofs, you can guess what happens. This is a classic externality.
Oddly, nuisance laws don’t seem to redress this problem—nor libertarian theory. I surmise that property law arose in an era that predated all this paving. (In fairness, I don’t know that zoning addresses this problem either.)
AtlasShrugged69
Sep 21 2022 at 10:24pm
Building Codes are probably the standard method by which to address this issue, but an idea I just thought of was some kind of Court/Tax compensation remedy? Property owners whose structures only recently begin flooding can ‘sue’ for damages and to rebuild in a way that floods no longer impact the property. This would leave developers free to build without having to worry about the Rainwater Drainage Inspector gumming up their schedule, and the city could just allocate tax revenue into a ‘flood damage fund’, which they could apportion out depending on the number of claims. Definitely an interesting negative externality.
Ridahoan
Sep 21 2022 at 10:26pm
Propublica did quite the scathing report on the lack of land use law and planning, combined with local corruption, that facilitated selling off land actually within demarcated water reservoirs to real estate developers and then to individual home owners. Alas, large subdivisions flooded. So much for laissez faire land use.
John hare
Sep 22 2022 at 6:18am
Here in Florida individuals need to check out a property before purchasing. One of the properties we looked at last year had three quarters of the acre in wetlands. Wet lands=do not touch, no construction or even landscaping.
it seems to me that buyers beware should be understood such that people do due diligence. Those people buying flood prone in Houston should either buy so cheap they are willing to risk water damage. Or walk away and let the developers go broke.
And if the area was municipal reservoir and sold to developers, shouldn’t there be criminal proceedings? Both city officials and developers?
Scott Sumner
Sep 22 2022 at 2:58pm
The flood problems in Houston have nothing to do with a lack of zoning, but this is the sort of myth that pro-zoning people use–like the factory next to the school.
Matthias
Sep 21 2022 at 9:54pm
Alas, Houston still has things like minimum parking requirements, doesn’t it?
Seppo
Sep 22 2022 at 2:23am
How does Houston deal with transport infrastructure for areas that get considerably denser? I would expect traffic to become horrible for a suburb with triple density compared to original.
Proliferation of home office is probably the best thing that has happened to commuting since… forever?
Lizard Man
Sep 22 2022 at 9:34am
I would think that density would decrease average commute times relative to the same population and a less dense area. If you cut the distance people need to travel in half, say, then average speeds would need to decrease to less than half for commutes to become longer than they otherwise would be.
Lizard Man
Sep 22 2022 at 9:38am
Also, my experience living in an area with increasing density is that traffic has gotten worse and slower mostly on highways, and not local roads. Local roads maintain good throughput, while the highways will often have gridlock. So if density increases in a way that allows folks to avoid highways, I think it will reduce commute times relative to a scenario where people are really spread out and everyone tries to use the highways to travel long distances.
Dylan
Sep 23 2022 at 5:59am
I think you’ll find that if you look at the data that increased density in a city is highly correlated with increased commute times. NYC has the longest commute times in the country even with a sizeable portion of the population living within a few miles of where they work. I know that personally, all my commutes have tended to hover around the 45 minute mark, whether I lived 30 miles away or 5, or whether I drove, took mass transit, or biked.
On the surface streets vs. highways I don’t have much in the way of data, but I can tell you that the surface streets in our neighborhood have definitely gotten considerably busier. When we moved in, traffic in this part of the city was mostly garbage and cement trucks and street parking was easy (albeit dangerous to leave your car parked for long). These days it can take a few minutes just to cross a side street as a pedestrian because of the constant flow of traffic.
Joseph Somsel
Sep 23 2022 at 7:33am
My libertarian instincts made me skeptical of zoning until I checked out New Orleans while considering a job offer. Now that city could have used zoning I thought.
But New Orleans and San Francisco share geography in that both are land-limited areas with very limited choke points for ingress/egress. There is no vast plains of unused land nearby and those choke points required expensive and rate-limiting infrastructure.
Too much demand and too little supply.
Houston has plenty of space to expand into when you’re relocating out of. You can’t tell SF or NO to do like Houston did.
Bobster
Sep 24 2022 at 12:58pm
Houston cannot grow towards the coast due to hurricanes.
Bobster
Sep 23 2022 at 2:30pm
I grew up in Houston and now live in LA.
Agreed on almost all points. LA desperately needs deregulation that Houston has.
Disagree on Austin being more attractive though.
Bobster
Sep 24 2022 at 12:58pm
My replies to people aren’t showing up
Comments are closed.
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Houston is the only big American city without zoning. Some people argue that Houston is effectively zoned, as many neighborhoods have deed restrictions that limit development. But in his new book on zoning, M. Nolan Gray points out that only 25% of Houston is covered by those contracts, and even in those cases the rest...
Certainly! I'm an enthusiast and expert in urban planning, zoning regulations, land use policies, and their implications on city development and housing markets. I can help explain the concepts and ideas embedded in the article referencing Houston's lack of zoning, authored by Scott Sumner on EconLog.
The article focuses on the city of Houston and its unique position as the only major American city without traditional zoning laws. Here are the concepts discussed in the article and the related discussions by commentators:
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Zoning Regulations: Zoning refers to laws that divide municipalities into different zones or areas, regulating how properties within those zones can be used. Contrary to the conventional practice of zoning, Houston operates without strict zoning laws.
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Deed Restrictions: These are private agreements that restrict the use or development of land. In Houston, while some neighborhoods have deed restrictions limiting development, they cover only about 25% of the city and are less rigid than explicit zoning laws.
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Externalities: The article discusses the concept of externalities, highlighting regulations concerning public nuisances, the placement of certain businesses relative to sensitive areas like schools or churches, and limitations on billboards. Externalities refer to the positive or negative side effects that affect parties not directly involved in a transaction or activity.
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City Development Patterns: The article compares the natural growth patterns of cities before zoning regulations were established to the artificially halted growth after zoning. It emphasizes how Houston has seen a more organic evolution, allowing various types of housing and density closer to urban centers due to its lack of strict zoning laws.
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Housing Policies and Market Preferences: The discussion touches upon the housing preferences of individuals, pointing out that a lack of zoning in Houston allows for diverse housing options, including single-family homes with large lawns, as well as dense urban living, catering to different market preferences.
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Zoning Referenda: The article mentions Houston's rejection of zoning laws in three referenda, attributing part of this refusal to the opposition from working-class voters and the acceptance from more affluent neighborhoods with private deed restrictions.
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Impact on Infrastructure, Traffic, and Flood Control: Commentators discuss issues related to infrastructure, traffic congestion, flood control, and the challenges arising from Houston's growth without traditional zoning laws. Some argue for the necessity of regulations to address flooding and transportation concerns.
This comprehensive overview demonstrates how Houston's unique approach to land use and development, lacking traditional zoning laws, has influenced its urban landscape, housing markets, and societal debates around regulations, market preferences, and externalities.
