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 has avoided zoning, was doing well. Gray is quite familiar with Houston and, indeed, devotes a whole chapter to laying out in what ways it does well.
Gray does much more than 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 new housing stock.
Excluding the wrong sort / Early in the book, Gray makes an important distinction between zoning and city planning. He learned that distinction on the job. As a city planner in New York, he had been required to work on the zoning help desk for at least one day a month, answering public questions about the city’s regulations. The main thing he learned was that “most people don’t know the first thing about zoning.” But he knows a lot about it and gives a nice summary of what it is.
Zoning, he writes, “regulates uses and densities on private land—nothing more, nothing less. It works principally by what it prevents rather than by what it causes.” Zoners decide whether a given area of a town or city should be zoned for residential, commercial, or industrial usage. They often zone residential areas as “R‑1,” meaning that only detached single-family homes are allowed. Such zoning often precludes even small corner grocery stores.
One of the first cities to adopt zoning was Berkeley, Calif., in 1916. Gray notes that the main proponents of zoning in Berkeley were homeowners and industrial interests. Berkeley was the first U.S. city to introduce single-family zoning. Single-family housing, of course, is much more expensive that duplexes, fourplexes, and apartment blocks. It might seem sensible to exclude industrial uses of property from residential areas, but tellingly Charles Henry Cheney, whom Gray calls “a key framer of Berkeley’s 1916 zoning ordinance,” singled out laundries as a use to exclude. His reason? Cheney thought that laundries would bring in “negroes and Orientals.” The horror!
In the 1920s, zoning went viral. Between 1916 and 1923, the number of municipalities that had adopted zoning rose from eight to 218, notes Gray. By 1936, over 1,000 municipalities had zoning. One of its major proponents was Herbert Hoover in his role as secretary of commerce from 1921 to 1928.
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.”
A major factor in making housing more expensive and pricing out lower-income people is zoning rules that limit density. The lower the cap on density, the fewer houses there are in a given area, and housing prices reflect this fact. Because black people and Hispanics are disproportionately lower income, the density rules have the effect, whether intended or not, of segregating communities. The opposite is true also. Gray reports on a study that found that increasing the zoned density of an area by just one housing unit per acre was associated with a 0.50% increase in Hispanic residents as a percentage of the area’s population and a 0.38% increase in black residents as a percentage.
In a chapter titled “Sprawl by Design,” Gray quotes an activist who opposed allowing a 14-story residential building on land on which an old hospital building in Queens sat. The activist asked, “How much more burden can we put on our environment?” With a boatload of data, Gray shows the absurdity of that question. It is low-density housing that burdens the environment more. New York, he writes, “may just be the greenest major settlement in America.” People in New York City “use far less energy, gasoline, and land per resident while producing less in the way of pollution, trash, and greenhouse gas emissions than their suburban peers.” Gray quotes an estimate that “a household in a detached single-family house consumes three times as much energy as a household in an apartment.” One major reason is that shared walls in apartment blocks make apartments more energy efficient.
On a related note, he points out that because zoning and other regulations make housing in coastal California so scarce and therefore so expensive, fewer people live in coastal California than otherwise would. This is a shame because coastal California’s temperate climate leads its residents to use much less energy to heat and cool their homes than people in other parts of the United States. Gray notes that Los Angeles, San Diego, San Francisco, San Jose, and Sacramento are “among the fifteen most energy-efficient cities” in the United States.
Reform / In a chapter titled “Toward a Less Bad Zoning,” Gray considers four reforms that would make zoning much less onerous:
- End single-family zoning.
- Abolish minimum parking requirements.
- Eliminate or reduce minimum floor area and minimum lot size requirements.
- Decriminalize certain kinds of housing that are more affordable.
The reason for the first is fairly obvious: it would free up land for building multiplexes and apartment blocks. The reason for the second is almost as obvious: requiring parking eats up land that could be used for housing and, as Gray notes, developers “have both the right incentives and needed local knowledge to determine how much off-street parking is necessary.” He points to some recent good news: in 2017, “Buffalo became the first major US city to abolish parking requirements.” The third proposal, to reduce or end minimum floor area and minimum lot size requirements, would allow more dense housing, driving prices lower. His fourth proposal is to allow the SROs mentioned above and allow manufactured housing. Manufactured housing, he notes, costs about a third as much as housing built on-site.
These four proposals, taken together, would likely bring down housing prices substantially. My guess is that the prices in coastal California, for example, would fall by 30% to 50%.
Gray doesn’t stop there. In a subsequent chapter, he argues for ending zoning by responding to what he sees as the best arguments for zoning. He notes that the arguments are really about dealing with negative externalities, like noise and bad odors, that have little or nothing to do with zoning. He makes the ultimate case by considering non-zoned Houston, which is now American’s fourth largest city. Gray points out that various Houston neighborhoods use deed restrictions to deal with potential negative externalities. The advantage that such restrictions have over zoning is that they are determined by owners rather than governments and they have both expiration dates and the flexibility to adjust to changed market circumstances.
Different interventions / Interestingly, I found Gray’s case against zoning more convincing than he did. To further boost affordable housing, he advocates price controls on housing even if zoning is abolished. He proposes a policy used in Massachusetts that gives permits to developers “who propose projects wherein at least 20 percent of the units are income-restricted.” He admitted in an email to me that this would impose price controls on that 20% of new housing. Does he realize that, as economists Benjamin Powell and Edward Stringham pointed out in a study for the Reason Foundation, such price controls would make developers less likely to build new housing?
Gray also claims that people shouldn’t support abolishing zoning if doing so “meant allowing developers to demolish truly historic buildings.” But what does “truly historic” mean? He seems to think he knows, but he doesn’t share this knowledge with the reader. He seems insufficiently aware of the ways people can act in the free market to buy up buildings that they regard as truly historic. I would rather put that term to a market test than to a bureaucratic test.
Conclusion / Until about a decade ago, zoning restrictions on housing seemed eternal. But intellectual ferment and even legislation are now pushing the other way.
In the last five years, I’ve reviewed two other books for Regulation that make the case for easing up on zoning restrictions. Richard Rothstein’s 2017 masterpiece, The Color of Law, argues that exclusionary zoning laws, along with other government interventions, make it difficult for black people to find affordable housing. (See “How Government Enforced Segregation,” Fall 2017.) Conor Dougherty’s Golden Gates documents attempts in the San Francisco Bay area to loosen restrictions on housing. (See “The Solution to Expensive Housing Is More Housing,” Spring 2021.) We are seeing some attempts at the state level to relax or end California cities’ requirements for single-family housing. If we see more of that and in more parts of the country, as I think we will, some of the credit will belong to Gray’s Arbitrary Lines.
