Comment of the Day: The Real Difference Not Having Zoning Makes

COMMENT OF THE DAY: THE REAL DIFFERENCE NOT HAVING ZONING MAKES Residential Density“For a city without zoning, development in Houston isn’t much different that it would be if we DID have zoning. Most retail development happens on major commercial thoroughfares, and most industrial sites are either along railway lines or otherwise clustered together. And development still has to comply with our (idiotic) setback requirements and parking minimums. The main difference Houston has over other cities with stricter land use regulation, is the ability to increase residential density in a fairly timely manner. This has helped keep housing costs from rising higher than they otherwise would have. The kinds of land use regulation in cities like New York, Washington and San Francisco generally benefit wealthy landowners at the expense of younger, poorer new-comers. Even current middle-class homeowners don’t really benefit: you can’t bank the appreciation until you sell, at which point you still have to live somewhere, and in the meantime, your property tax bill is higher.” [Angostura, commenting on Medistar’s Planned Webster Sprawl Plaza; The Most Congested Roads in Texas; Free Metro Rides] Illustration: Lulu

15 Comment

  • This really isn’t true, particularly in the supposed benefit to middle-class homeowners. Watching the row of matching houses across the street from you get torn town and replaced by a parking garage (as happened to someone I know on Caplin St circa 2000) with cars entering and exiting all day does not do much for property value. These things happen much more often in middle class neighborhoods than in wealthy ones where residents can band together and employ legal pressure or otherwise intimidate the developer. To say that commercial development only happens on major roadways ignores all the little commercial developments that dot neighborhoods such as the Heights, or neighborhoods that have watched themselves get surrounded and occupied by hulking industrial buildings with their tall metal fences, as well as large developments on major roadways that back into existing neighborhoods by buying out houses and clearing them.

  • Or in summary – the free market system works and does come to the most efficient allocation of resources.

    Nice post, Angostura.

  • Someone PLEASE give me one example in Houston where anyone other than “wealthy landowners at the expense of younger, poorer new-comers” benefit from a development AND where the city has not dictated this requirement such as Allen Parkway Village. Houston is no different than any other city quoted by Angostura.

  • Place like San Fran, Boston, NY, Portland and Washington DC have trouble increasing density because they are already very dense. Houston would be crazy cheap for housing if Midtown was zoned and developed like the Back Bay in Boston with midrise residential on every street corner. But we just let the chips fall where they may and get strip malls here and there and lowrise apartments in midtown until the market is screaming for more multifamily units.

  • @HouCynic,
    Just like in every other market, housing prices respond to supply and demand. By allowing residential density to increase in response demand for housing, prices (both for sale and rent) are lower than they otherwise would be. Yes, developers benefit, but so do their customers. (In every market-based transaction, both parties benefit; otherwise the transaction wouldn’t take place.) EVEN IF developers are just building $2000/months apartments for twenty-somethings making 6-figure incomes, lower income people benefit from this increased housing supply because it means those twenty-somethings aren’t bidding up the price of whatever housing already exists.
    It baffles me how “affordable housing” advocates think that preventing increased housing supply is supposed to result in lower prices.
    There is a LOT of demand for increased density in SF, NY and DC, despite the fact that density is already relatively higher than most places. The price signal is generally pretty good at indicating how much density the market can absorb, and the rents for existing apartments in those cities indicate that there’s a lot of un-met demand.

  • It is pitiful that developers build residences adjacent to freeways and railroads, and more pitiful that people actually buy these places, and even more pitiful that they then complain about noise, traffic, and pollution.

  • @Angostura, I think the best illustration of your displacement point is looking at where the hotshot 6-figure 20-somethings are moving in a given city. In Houston, the swarm of highly-paid engineers and analysts are moving into newly-built high-rise apartments, whereas in NYC, SF, Chicago, and to a lesser extent DC, all the I-bankers and programmers are just as well-paid (if not more so), and still moving into shitty 100-year-old walk-ups. That’s why there all the housing stock that should be affordable in those cities is prohibitively expensive, whereas all the new class A housing in Houston means there are a ton of perfectly adequate, well located units that are still affordable for relatively poor newcomers. I know waiters, artists, admins, etc who live in apartments that would make my NYC finance friends jealous.

  • I’ve made that point. I don’t fear that a trash dump will open next door to me, or a highrise, because it wouldn’t make sense for a builder to buy land near my house to do that. Without “government” zoning, you still have “market” zoning. The market will respond to consumer demand. Which is more than I can say for putting the government charge.
    Seriously, have any of you had to deal with the City of Houston on anything? You want them IN CHARGE of what goes where? Really?
    And in a way, the city already HAS that power (rules, setbacks, etc. brought up before). Plus, if they want an area redone, they don’t need to take property to do it, they can just go after the owner and red tag them into submission till they sell to a developer. I’ve seen that shit first hand.

  • Mike: “these things happen much more often in middle class neighborhoods than in wealthy ones where residents can band together and employ legal pressure or otherwise intimidate the developer.”
    Or could it be that parking garages don’t get built in wealthy neighborhoods because the cost basis for the land is much higher, thus making the financials of the garage much worse?
    Same reason you see trash dumps put out in BEF and not in river oaks. You can say it’s because the rich people would fight it (and honestly, they likely would). But it’s really because the economics dictate what’s put where based on highest and best use of the land.

  • The comment that no zoning leads to fewer barriers to high density housing, thus keeping housing costs from rising higher does’t seem to hold true from an observational perspective. How many middle class people can afford the going price for a new townhouse anywhere in the Houston metro? Few if any are priced below $300,000 and inside the loop mostly $400,000 and up. These are not typically ‘family” houses, and in some developments, they are so close together now that to enter the house you need to open the garage door….yes, no front door exists. The inner loop was much more affordable prior to the advent of the townhouse takeover.

  • @sjh,
    Yes, a $400k townhouse is out of reach for most home-buyers. But try pricing a nearby similarly-sized single-family home on a 10,000 s.f. lot. We don’t need to speculate on what home pricing would look like if density didn’t increase; we already know. Just look at home prices in River Oaks or Tanglewood, where density isn’t allowed to increase. To get the square footage of a typical new-build townhouse in one of these areas, you’ll need to spend north of $1.5M.

  • @Old School, of course there would be crazy cheap housing if Midtown had been forced to be built out completely with mid-rise apartments that over supplied the market. However, the market wanted something different, which is why there are townhomes, apartments, and empty lots in MIdtown. When we bought our townhouse in 1998, no one wanted apartments East of Main, so townhouses appeared.

  • The ability to add housing (higher density or not) as market demand dictates doesn’t necessarily mean that new housing will be inexpensive. Far from it. It does mean, though, that the new housing will be less expensive than it would have if the supply of land available for it in desired locations was restricted by zoning, or if the approval process was otherwise more burdensome and time-consuming.

  • @ Old School: The multifamily developers that know how to work through California’s regulatory system on urban land deals are able to capture profits on the ultimate sale of their property that are several orders of magnitude higher than what a developer in Texas will ever realize. They also have a lot more project proposals that get quashed. The higher risk is why anything that they build turns to gold. And that right there is your indicator that indeed the regulatory environment is a constraint on growth and drives up housing costs.

    @ sjh: There’s a development off of Navigation and Lenox Street that offers townhomes for as little as $219k. Of course, then you’d have to live in 2nd Ward. Very few people would rather make that tradeoff than would pay more money for a better location or that would simply go and purchase used housing. This fact doesn’t necessarily indicate a problem with affordable housing.

    At the low end, there is still plenty of older housing available for purchase in the low-$100s or even below that. (Again, I urge you to look at the 2nd Ward as a case study.) The housing that is affordable is not very nice, but its there and has been for a long time with very limited appreciation except for a relatively few but highly visible ‘hot’ neighborhoods. If the top of the market is getting bigger and the bottom market isn’t actually going away, that also does not indicate that there’s an affordable housing problem.

    In both instances, its my belief that the real problem is rooted in irrational consumer preferences, especially that people desire to “belong” in a neighborhood that reflects their ideals and aspirations. That might be a problem if you feel that you can only “belong” in an established and affluent white neighborhood; and then you’re likely to perceive housing affordability as a major problem. It’s not as much of a problem if you feel that you can find your “belonging” perfectly well in a working-class Hispanic neighborhood. In general, the more open-minded you are and the less that you perceive that you “need”, the more economic and personal freedom you have; it is possible to take this axiom to a very VERY far extreme.

  • that or people just want to feel safe.