High housing prices have reached crisis proportions in many parts of the country. In response, Minneapolis, Oregon, and California have abolished single-family zoning. This will not reduce housing prices, but it does betray the property rights of both urban homeowners and rural landowners.
Surveys consistently show that 80% of Americans prefer or aspire to live in single-family homes, a preference that has been underscored by the pandemic. Yet when urban planners declared a war on sprawl in the 1960s and 1970s, they effectively made war on single-family housing. Since 83% of occupied single-family homes are occupied by their owners while 87% of multifamily homes are rented, planners were also declaring war on homeownership.
Planners fought the war on sprawl by convincing many state and regional governments to limit the physical spread of urban areas. They called this growth-management planning, and the most common growth-management tool was an urban growth boundary. Outside of such boundaries, development was practically forbidden.
When urban planners declared a war on sprawl in the 1960s and 1970s, they effectively made war on single-family housing.
For example, more than 98.5% of Oregon is outside of an urban-growth boundary. Rules outside the boundaries are so strict that, in most places, people can’t build a house on their own land unless they own at least 80 acres, actually farm it, and actually earned $40,000 to $80,000 (depending on soil productivity) per year from farming it, in two of the past three years.
Hawaii passed the nation’s first growth-management law in 1961. By 1970, Hawaii had the most expensive housing market in the country. A standard measure of housing affordability is the price-to-income ratio, defined as median home price divided by median family income. Hawaii’s ratio in 1970 was more than 3, while in every other state it was 2.4 or less. California was 2.2.
In 1963, the California legislature passed a law giving cities control over what happened outside their city limits. In the 1970s, a slow growth movement led cities to draw urban growth boundaries, effectively forcing all new development to take place within those boundaries. By 1980, many California urban area price-to-income ratios were above 3.0, and some were above 4.0.
Oregon passed its growth-management law in 1973, ultimately requiring cities to draw urban growth boundaries in the 1980s. Florida passed a growth-management law in 1985, New Jersey in 1986, and Maryland and Washington in 1992. Housing affordability declined after all these laws were implemented.
More than 98.5% of Oregon is outside of an urban-growth boundary. Rules outside the boundaries are so strict that, in most places, people can’t build a house on their own land.
Most New England states abandoned the county level of government, effectively turning land-use regulation of county lands over to the cities. In many cases, these cities heavily restricted development of the lands outside their boundaries. Housing prices rose, particularly in Massachusetts, Rhode Island, and Connecticut.
Colorado didn’t pass a state growth-management law, but the Denver Regional Council of Governments drew an urban growth boundary in 1997. Denver price-to-income ratios rose from 2.2 in 1990 to 3.5 in 2005. With the cooperation of county governments, a few other cities, including Fort Collins and Missoula, also adopted urban growth boundaries, making their housing expensive as well.
A 1975 article in Environmental Law called these plans and enactments the “New Feudalism” because, while they allowed private ownership of land, they transferred the development rights to that land to the government. This, in fact, represented the largest taking of property rights from rural landowners since China collectivized its farms in 1953.
After the Soviet Union fell, a Chicago Tribune reporter quoted a Russian saying that “Americans don’t have any serious problems, so they have to invent them.” Urban sprawl is one of those invented problems. Originally, the war on sprawl was supposed to protect farmlands, but the United States has three times as many acres of agricultural lands as it actually uses for growing crops. Moreover, the number of acres of cropland has steadily declined, not because of urbanization, which covers only 3% of the nation’s land, but because the per-acre yields of most crops have grown faster than our population.
This represented the largest taking of property rights from rural landowners since China collectivized its farms in 1953.
In 1973, the year of the first energy crisis, a book entitled Compact City suggested that denser cities could save energy. Yet the Department of Energy’s Buildings Energy Data Book shows that multifamily housing costs more energy to build and to operate than single-family homes. The department’s Transportation Energy Data Book found that people living in dense cities drove fewer miles than people living in low-density areas, but because the former drove in more congested conditions, they used more fuel (and also emitted more greenhouse gases) per capita than their low-density counterparts.
In recent years, planning advocates have blamed everything from obesity to teenage suicides on low-density suburbs, but these claims are specious. A study that found that suburbanites weigh a few pounds more than city residents, for example, ignored a self-selection bias, which is that overweight people choose to live in areas where it is easier for them to drive. In other words, obesity might contribute to (geographical) sprawl, but suburbs don’t make people fat.
Most recently, planning advocates have claimed that increased density is the solution to housing affordability problems. This conveniently ignores the facts that it was growth management that made urban areas expensive in the first place and that higher densities are positively correlated with less affordable housing.
Once growth boundaries are drawn, land inside the boundaries quickly becomes much more expensive. A 2017 study of metropolitan area land values found that the average acre of land in many California urban areas costs more than ten times as much as the average acre in fast-growing regions that don’t practice growth management. The high cost of land makes existing housing expensive. High housing costs increase labor costs, which makes constructing new housing more expensive.
Obesity might contribute to geographical sprawl, but suburbs don’t make people fat.
California has the densest and most expensive urban areas in the nation. Thanks to growth management, 95% of the state’s 2010 population was confined to 5% of the state’s land. The average density of California urban areas was twice that of the average for urban areas in the rest of the country. Median home prices averaged more than 6 times median family incomes, and in some cities price-to-income ratios were more than 10.
In response, planners proposed so-called “affordable housing” in the form of mid-rise to high-rise developments. These are anything but affordable, as the need for elevators and structural steel and concrete make such housing cost several times as much, per square foot, as single-family homes.
Testimony by California housing developer Nicholas Arenson before a San Francisco regional planning commission noted that the most affordable housing is two stories tall. Three-story condominiums and townhomes, he said, cost 30 to 50% more to build per square foot and “sell at a discount to all single-family homes,” meaning buyers aren’t willing to pay as much for them as for single-family homes. Four-to seven-story midrise developments cost two to four times as much to build per square foot as single-family homes and “sell at a further discount,” while highrises (eight stories on up) cost 5.5 to 7.5 times as much per square foot as single-family homes. In short, midrises and highrises are more expensive to build, but less desired by homebuyers. Thus, developers won’t build them unless they are subsidized or housing prices are very high.
To make multifamily developments appear affordable, housing units are generally very small, often under 1,000 square feet. In addition, many are subsidized with low-income housing tax credits or other affordable-housing subsidies. Cities are building or encouraging developers to build 1,000-square-foot apartments or condos that cost as much as or more than 2,200-square-foot single-family homes in places that don’t have growth management.
Growth management makes housing expensive even without single-family zoning, because it increases land, labor, and construction costs.
To find more places to build such projects, planning advocates have demonized single-family zoning, blaming it for high housing prices. Such zoning supposedly created an oligopoly in housing, driving up prices. But an oligopoly doesn’t work unless it controls the entire supply, and so long as areas on the urban fringe are available for development, single-family zoning can’t make housing more expensive.
Practically every city in America except Houston has had single-family zoning for 60 to 110 years, and housing remains affordable in areas that don’t use growth management. Home prices in Dallas, which has single-family zoning, are practically indistinguishable from those in Houston. Growth management, on the other hand, makes housing expensive even without single-family zoning, because it increases land, labor, and construction costs.
Nevertheless, many elected officials believed planners’ claims. The city of Minneapolis abolished single-family zoning in 2019. Oregon’s legislature ordered cities to do away with single-family zoning in 2019, and California’s legislature followed in 2021.
Some free-market advocates claim these are victories for property rights. Yet the primary supporters of single-family zoning were homeowners in single-family neighborhoods who argued that abolishing such zoning was taking away their property rights. This may seem paradoxical, yet historically they were correct.
In 1890, before zoning had been invented, homeownership rates in American cities were below 18%. This is not because housing was expensive: new single-family homes with private yards and indoor plumbing sold for as little as $1,000, or about $25,000 in today’s money. Instead, few were willing to buy, because they feared that much of the money they invested in their homes would be lost if someone built an incompatible structure next door.
Almost no one today lost any property rights because of single-family zoning; instead, they willingly bought their homes and often considered homeownership more desirable because of such zoning.
In the 1890s, suburban developers started adding protective covenants limiting the use of lots to single-family homes. These covenants did not increase the cost of housing, but they increased the rate at which lots sold, allowing developers to recover their investments more rapidly. In effect, the covenants were a property right not just to live in a single-family home but to live in a single-family neighborhood.
This was so successful at boosting homeownership rates that city officials wanted the same benefit for areas within their boundaries. Single-family zoning was invented explicitly to confer the same property right to existing single-family neighborhoods as that created by covenants for new developments.
By 1960, almost every city in the country except Houston and a couple of its suburbs had adopted zoning ordinances with single-family zoning. Housing developments outside of zoned areas routinely included protective covenants, and when such developments were annexed into cities they were zoned for single-family uses. Urban homeownership rates were more than three times greater than they had been before covenants and zoning.
This means that almost everyone who owns a home in an area zoned for single-family housing today bought the home after it was so zoned or protected by covenants. Almost no one today lost any property rights because of single-family zoning; instead, they willingly bought their homes and often considered homeownership more desirable because of such zoning.
Residents of single-family neighborhoods have good reasons to want to keep their neighborhoods that way. Adding multifamily housing increases congestion. Urban services decline, or taxes rise to pay for relaying sewer and water utilities and providing other services to support higher densities. Multifamily housing attracts crime, not because the residents are likely to be criminals but because the common areas in such housing make them attractive to property crimes, which can spill over into single-family areas.
Single-family zoning didn’t make housing expensive, but it did increase homeownership rates, which allowed people to build wealth and to use the equity in their homes to start small businesses. Abolishing single-family zoning won’t make housing more affordable, but it will increase congestion, taxes, and other bad features of denser cities.
Those who advocated the abolition of single-family zoning betrayed the residents of single-family neighborhoods who thought they were buying homes in quiet, stable areas. Even if you don’t agree with my argument that single-family zoning is a property right, such laws betrayed prospective homebuyers by making the kind of housing most prefer less affordable.
They also betrayed rural landowners who lost property rights to growth management by not restoring those rights (which would have made housing affordable again). And they betrayed taxpayers, who can now look forward to paying higher taxes to subsidize more so-called affordable housing. People who care about property rights or housing affordability should focus their efforts on abolishing the New Feudalism, not single-family zoning.