How good would the abolition of zoning in New York City be?

by on April 28, 2008 at 6:56 am in Economics | Permalink

Yes, I am opposed to many forms of zoning.  Without zoning our cities would be denser, more eco-friendly, cheaper to live in, more able to produce economies of agglomeration, and more immigrants would benefit from American prosperity.  Matt Yglesias periodically has good posts on this topic. 

More specifically, Manhattan would look more like Sao Paulo, with a true forest of skyscrapers instead of the current puny and indeed embarrassing line-up.  Many of these towers would be residential, as they are in Sao Paulo.  Many problems of cities, including congestion, would of course become worse.  Overall I see the gain as real but a small one, at least relative to gdp.

A key question is what zoning means.  Let’s say you wanted to set up a shack on the sidewalk and live in it; should that be allowed?  How about a modest apartment building but without a water connection?  Should Manhattan really become like Sao Paulo?  Only in extreme cases would I wish to waive such infrastructure requirements for the housing stock.  And if you agree with me on that one, then you don’t want to get rid of most zoning either.

1 Justin Ross April 28, 2008 at 8:05 am

As a libertarian, my view of zoning as a net-positive in the U.S. is an unpopular one. Clearly the costs you mention exist but it has further additional benefits. Local governments are more powerful than people realize in the political process, and zoning plays a big part of that story. Zoning ensures the full capitalization of benefits and costs into the price of housing, which for most families represent their largest store of wealth. So unlike the state or federal level, local voters feel the pain or gain of their policy makers actions. Since amenities or disamenities are capitalized over a very long time horizon (if they announced that 200 years from now a nuclear waste dump would open in Fairfax, your property values would certainly fall), even politicians become far-sighted beyond their typical election cycle. I believe zoning is a big reason why we do not have more state and federal government.

I would strongly recommend “The Homevoter Hypothesis” by William Fischel. A well written book on zoning, property taxes, and housing prices.

2 Tom T. April 28, 2008 at 8:32 am

Rather than zoning, the point about the water connection seems to implicate building codes, and the point about the shack on the sidewalk seems to implicate basic property rights. It seems like it’s important to define what we’re talking about here before we can have a meaningful discussion.

3 wugong April 28, 2008 at 9:04 am

“Manhattan would look more like Sao Paulo, with a true forest of skyscrapers”

I’m not sure this is the case. I recall learning that the bunching of skyscrapers on Manhattan was dictated by geology. Only some parts of the island would adequately support buildings of those heights.

4 Apikoros April 28, 2008 at 9:18 am

Expanding on wugong’s comment above…

Parts of Manhattan are underlain by a granite batholith. It is easy to see where it outcrops, just turn on 3D buildings in Google earth. Elsewhere the island is glacial till and not competent to support skyscrapers.

Houston is entirely underlain by limestone which, while more competent than glacial till, will not support extremely tall buildings. The tallest building in the world will never be located in Houston, sorry.

5 Gavin Andresen April 28, 2008 at 9:28 am

Regarding shacks and buildings without water hookups:

Keep the building codes that require that building not fall down, burn down, or otherwise be a menace to their residents or neighbors. So no shacks that lack a working toilet, and no skyscrapers made out of straw.

But get rid of the zoning rules that dictate what can be built where. Replace all that with a law that allows me to sue my neighbor for damages if I could show that my property’s value declined because of some change they made to their property.

6 mobile April 28, 2008 at 10:05 am

@spencer: Pin Point, Georgia is another community with little in the way of zoning regulations, but it should be easy to see why the density there is still very low. When Houston attracts as many residents as New York City currently has, the lack of zoning will help it to become denser.

As I see it the main advantage of no zoning, especially in a boom-bust town like Houston, is the flexibility you get in your land use. Residential land can quickly be converted to commercial/industrial use and vice versa depending on how different parts of the economy are doing. In this context, zoning can be kind of like a restriction on labor mobility, tying up land in unproductive uses.

Of course, another characteristic of Houston is that progressives think it is ugly. I leave it to the rest of you to decide if that is a bug or a feature of no zoning.

7 KipEsquire April 28, 2008 at 10:13 am

Sorry for the Clintonism, but it depends (as you note) on what your definition of “zoning” is.

First-order zoning — an area is simply designated “residential,” “commercial” or “industrial” — is not an excruciating libertarian abomination and can be defended, at least in the abstract, as externality-correcting.

Second-order zoning — height restrictions are the best example — are less defensible and should be presumed illegitimate (i.e., restrictions should be subject to heightened scrutiny). This is the kind of “zoning” imposed on most of Manhattan.

Third-order zoning — where any and every alteration, expansion or demolition must be submitted to an unelected board with near-plenary authority to approve or reject the project — for any reason up to and including the whim and caprice of the board members — is per se illegitimate, and under any sane jurisprudence such an infringement of fundamental property rights would be an irrebuttable due process violation. (So-called “historic districts” — of which there are many in New York City — are the most egregious example.)

8 spencer April 28, 2008 at 10:40 am

Density in Atlanta is 110% of Houston.

I live in Boston and keep hearing how zoning restricts density.

But when I drive through the older, close in towns and neighborhoods what I see are areas dominated by triple deckers and apartment buildings. Outside of a few parks and/or schools I see no grass. Sure there are very expensive communities 10-15 miles out with very restrictive zoning and 1-2 acre minimum size lots, but in terms of share of total housing, land area, etc., these low density areas are relatively small. It is hard for me to see that zoning is the major factor. Rather, it seems that it is consumer demand. What people want is the classic suburban single house on a grassy and treed lot. Consumers are willing to pay a lot, especially if you include commuting costs in the equation to avoid the high density neighborhoods. This seems to be true in essentially every city. Houston has some of the worse commuting in the country. In Washington people elect to live in the far suburbs rather then close in because they do not want urban density. So is the culprit really zoning rather than consumer demand.

9 mobile April 28, 2008 at 10:47 am

I think the answer to vanya’s question is: men.

10 Mo April 28, 2008 at 11:03 am

Actually Kip, I would consider first-order zoning to be worse than second-order. Reducing the number of mixed use zones is what causes a lot of problems, such as increased crime, polution and creates dead zones in cities. First order zoning causes all sorts of privacy issues, such as, whether your home business is a zoning violation.

11 Mercutio.Mont April 28, 2008 at 11:10 am

Paris and London are great precisely because they haven’t been taken over by skyscrapers?? Ever try to rent an apartment in London? Even a few years ago, when the US$ was almost worth something, the rents and real estate prices were absurd. In the parts of town where “real”/working people live, you see many cute little three and four story houses. They look historic. But living in them is often miserable – ancient appliances, shared bathrooms (!!), rat infestations, rotting walls. And of course the rents are still sky high.

For an example of a beautiful city with highly dense residential towers, look at Vancouver.

http://upload.wikimedia.org/wikipedia/en/0/0f/Vancityskyline_cropped.jpg

I was just there this weekend, as a matter of fact. One can rent new construction studios in excellent locations for C$1200. The city is a happening place, very fun.

12 Reilly April 28, 2008 at 11:43 am

Nobody’s linked to Ed Glaeser’s fantastic paper on this yet? http://www.economics.harvard.edu/faculty/glaeser/files/Manhattan.pdf

Mercutio.Mont:
That’s only the downtown core of Vancouver. Venture anywhere beyond that and zoning bylaws are insane – 75% of Vancouver is still zoned for single-family housing. That said, I do like what we’ve done with downtown.

13 jorod April 28, 2008 at 11:54 am

In Chicago, zoning provides substantial income for the city’s alderman, if you know what I mean.

14 Reilly April 28, 2008 at 12:48 pm

Spencer: it’s not a minor issue. Read Glaeser’s paper on Manhattan, he estimates that regulations inflate housing prices by 50% there (and he proposes that 20% would be the ideal). I’m going to trust a very prominent urban economist on this one.

It’s not the only thing that accounts for the differences, but it really is significant.

15 AC April 28, 2008 at 12:50 pm

While Houston does not have zoning that mandates the separation of uses, it does have minimum site area requirements — i.e., density limits. It also has setback requirements and minimum street widths that are anti-density.

Spencer, I’m not sure what density metric you are using. In order to compare apples to apples, you should look at the density of urbanized areas. Under this metric, Houston is slightly below the median for large metropolitan areas. Atlanta, however, is an outlier at the bottom — its urbanized area is much less dense than that of other major metropolitan areas.

Personally, I think that the best measure of density is “perceived” or “weighted” density, where you weight density by, say, census tracts. That is, if a census tract has 10% of the population, its density counts for 10% of the total. This gives a more accurate description of the density at which the average person lives. (I’ve calculated weighted density for the 32 largest metro areas + Austin and Honolulu at http://austinzoning.typepad.com/austincontrarian/2008/03/weighted-densit.html)

16 Bald Idiot April 28, 2008 at 12:57 pm

Neither of the examples given to support the necessity of some zoning regulations (shack on the sidewalk, apartment without water) really makes the case, in my view, even if one conflates building codes with zoning laws.

The apartment without water would be less valuable than similar apartments with water, but not dangerous — let the market decide.

The shack on the sidewalk is prohibited without any zoning laws, for the same reasons that one cannot construct a house in the middle of Central Park in New York, or in someone else’s yard.

A stronger argument (for building codes) would be an apartment with inadequate structural strength, but this problem, like the shack, is addressed through other channels. Market forces encourage owners to build structures that will last (and hence provide income for decades rather than for months). Liability law provides the “stick” that complements the market “carrot.”

17 marketurbanism.com April 28, 2008 at 1:17 pm

Many of Manhattan’s skyscrapers are much taller than typical Sao Paulo skyscrapers. This is mostly because of the rock that lies under Midtown and Downtown. On the rest of Manhattan island the soil is less friendly to skyscrapers, rendering tall buildings less economical (but not impossible). Nonetheless, restrictive zoning prohibits denser development in almost all areas of Manhattan.

The restrictions are mostly created to cater to NIMBY activists who are afraid of too many people moving to their neighborhood, using more parking spots, making sidewalks more crowded, blocking views, and altering the “character† of their neighborhood. These activists have been granted property rights over their neighbors’ land. Of course, this restricts creative destruction, and prevents entrepreneurs from increasing supply to meet the market demand. Shortages arise as a result of the density restrictions coupled with a limited stock of developable land.

On top of all that, bureaucracy creates barriers to entry for new development. Part of this is due to the fact only well-connected developers are able to work city hall to get favorable zoning, and subsidies that others could not. This raises the price of land to a level that only developers who can work the system can afford, flushing out wannabes that would build more housing and office space. Zoning restrictions, bureaucratic delays, and barriers to entry in NYC create a shortage of housing and office space, drive prices though the roof, and forces people to migrate to the outer boroughs and suburbs to find an affordable place to live.

Without density restrictions, Manhattan would still be very expensive due to the higher construction costs of denser development. However, if developers were allowed to meet the market demand, a greater “forest of skyscrapers† would arise. Higher land costs would be absorbed by more units, which would help keep rents in check.

18 Bernard Yomtov April 28, 2008 at 1:55 pm

Consumers are willing to pay a lot, especially if you include commuting costs in the equation to avoid the high density neighborhoods.

Are you talking about Boston? That doesn’t sound right. Priced a Back Bay condo lately?

19 spencer April 28, 2008 at 2:22 pm

Specifically, Coldwell Banker looked at a 2,200-square-foot house with 4 bedrooms, 2 1/2 bathrooms, a family room and a two-car garage. The neighborhood – a more subjective measure – is one “typical for corporate middle-management transferees.”

This priced Boston at $1.2 Million and in Wellesley at the same $1.2 M

20 spencer April 28, 2008 at 2:49 pm

I seriously doubt that eliminating D.C. height restrictions would cause the price of housing in Mclean to fall.

My density data is from Census for standard metropolitan areas.

21 David Sucher April 28, 2008 at 3:13 pm

Is it true that Sao Paulo has no zoning?

22 apikoros April 28, 2008 at 4:14 pm

In case anyone is interested in the geologic aspects of Manhattan Island, an excellent guide can be found at Hofstra’s web site

23 Jim April 28, 2008 at 5:29 pm

It’s funny, here in England the libertarians complain that our cities are too dense and don’t sprawl enough, and blame regulations, while the Conservative (ie supposedly free market) candidate for Mayor of London has campaigned on a promise of stopping skyscraper construction.

I’m surprised nobody has pointed out the main reason why New York City is so dense: because it was built before the car became widely available. Cities built in the automobile age tend to be low density, Houston being an example, but close the subway down and NYC would stop working. The important point here is that urban form is path dependent: once an area starts out low density it’s very hard to fund the mass transit that makes high density possible. So if you want cities to be able to densify you probably need some anti-sprawl or pro-density regulations built in from the start.

24 john pertz April 28, 2008 at 9:44 pm

Does a discussion about government planning of road systems have any effect in defining the look and feel of a city?

I mean if the government is building two, three, four lane roads throughout the city it usually means big box retailers, lots of single use development, residential only areas, and gated communities. The kinds of development that are far too prevalent in modern America and the kind of growth that makes a place uninteresting.

Arent these the fundamental aspects of a great town or city

1. mystery-the idea that you cant clearly understand every aspect of the city and what lies next. Sort of how you feel when you walk around lower Manhattan.

2. Mixed use-the ode to Jane Jacbos. The commercial businesses on the first floor and the apartment tenants living above. The idea that many types of social and economic activities can be accomplished in the same place. That a space can allow humans to accomplish a variety of tasks.

3. Im pretty sure green spaces have always been considered a plus in the development vernacular.

4. a There There-something that has been sorely missing in the world of non-mixed use, big government road development.

-The bad guys in the development story in my view are the politically connected developers, the politicians making the road design and construction decisions, and the NIMBY crowd who are generally just plain wrong.

-I see a moderate libertarianism as the most rational rout to developing more interesting and useful places.

25 Steve Sailer April 29, 2008 at 1:40 am

Does anybody live in Sao Paulo who doesn’t have to for his job? Doesn’t everybody who can afford it live in Rio?

26 Bernard Yomtov April 29, 2008 at 5:43 pm

spencer,

I think I misunderstood your point. Sorry.

27 Daniel Reeves April 30, 2008 at 6:54 pm

What about people’s interests and desire on living in these congested cities? I understand the difference between individual and social optimums, but in the long term, both will coincide. Those who see a city as too congested for the benefits it offers will not go to it, and, in due time, those who do not like the congestion will move out.

Having too many zoning laws is bad because it lowers the supply of homes available, which raises prices. One real estate firm estimated that a home on a quarter-acre in Houston that costs $152,000 in Houston would cost over $300,000 in Portland, OR, $900,000 in Long Beach, CA, and over one million in San Francisco. If you had the same zoning laws in all of these areas, I bet the prices would be much closer after ten years.

Regardless, the fear about cities getting denser is over-exaggerated to me. The reason why cities seldom spring up anymore and the reason why people spread out to the suburbs in the 20th century is the car. People have always been willing to go as easy transportation will allow them to go without restricting their ability to get everything they need. So before the car, all people could do was walk, which meant people needed to get together in cities. When the train came along, people went to the Midwest because it was less dense. When transportation to and colonization on the moon becomes easy, people will go to the moon because it will be less dense.

Don’t you think that with a widespread concern of congestion that individuals themselves will dislike congestion and work to avoid it?

28 Hanny October 28, 2010 at 4:18 am

If people can afford leaving in NY means that they have enough money to invest.Also being so developed makes the city more attractive to new investors.Hannah Jones Homeowners Insurance

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