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How good would the abolition of zoning in New York City be?
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.
Posted by Tyler Cowen on April 28, 2008 at 06:56 AM in Economics | Permalink
Comments
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.
Posted by: Justin Ross at Apr 28, 2008 8:05:36 AM
I am totally unfamiliar with zoning in NYC. What is it that keeps residential skyscrapers at bay? It is hard to believe that Trump wouldn't find some way to satisfy this great demand.
Given that Houston doesn't have significant (if any) zoning, why don't we see the dense downtown there?
Posted by: Craig at Apr 28, 2008 8:19:07 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.
Posted by: Tom T. at Apr 28, 2008 8:32:23 AM
Have to take issue with your characterization of the New York skyline as puny and embarrassing, even relative to Sao Paulo:
http://www.emporis.com/en/bu/sk/st/sr/
@Craig: land values in Houston are much lower than in New York. It is still possible to get an empty lot to build on within a 30 minute drive of downtown, or to buy an existing house cheaply within a 15 minute drive. Until the city's Lebensraum is depleted, or until resident's revealed preference for high density living changes (though the west side is fairly dense, and even downtown is dense relative to other urban centers in Texas and surrounding states), Houston will sprawl. (Even high energy costs would have less of an impact in Houston on encourgaing density -- when energy costs are high, that means the Houston economy is doing well and people feel rich enough to commute).
Posted by: mobile at Apr 28, 2008 9:03:41 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.
Posted by: wugong at Apr 28, 2008 9:04:11 AM
Glaeser on the subject: "Home building is a highly competitive industry with almost no natural barriers to entry, and yet prices in Manhattan currently appear to be more than twice their supply costs. We argue that land use restrictions are the natural explanation for this gap."
What keeps residential skyscrapers at bay is the maximum floor area ratio codes, which dictates the average number of floors a zoning unit (usually a building or two) can accomodate. Building tall buildings typically requires paying adjacent propertyholders with short buildings to combine zoning units ("buying air rights").
For comparison with your local property market and building patterns, $2k/month for a studio apartment in an unglamorous part of the city is not a bad price.
Manhattan residents already have long commutes (avg. 30m); the zoning limits push people ever further to the fringes. As pointed out a few days ago, long commutes make people unhappy, while people get used to small apartments. So this has major repercussions beyond measured GDP--both distributionally and in unmeasured consumer surplus.
Posted by: David at Apr 28, 2008 9:13:50 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.
Posted by: Apikoros at Apr 28, 2008 9:18:19 AM
I should add to the above: that's Manhattan residents. Most of the people who work in Manhattan don't live there (even though many of them would if they could afford it); those living along suburban train lines have 1 - 2hr commutes.
Posted by: David at Apr 28, 2008 9:19:30 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.
Posted by: Gavin Andresen at Apr 28, 2008 9:28:26 AM
I accept the argument that zoning can limit density and make cities more expensive. But I seriously have to question if we are giving way too much weight to zoning when other factor are really the driving factor.
Houston is supposedly the prime example of a city with no zoning. But if you compare population or housing density in other cities to that in Houston it seems hard to conclude that zoning is really the culprit. Houston is the 14th largest US metropolitan area, but in terms of population or housing density it ranks around 60th. Population density in LA is 386% of that in Houston. Greater NY is 335% of Houston, Chicago is 218%, Miami is 203%, and even Boston is 170%. Dallas-Fort Worth has a population of 5.2 M compared to 4.7 M in Houston. Yet, population density in Dallas is only 95% of that in Houston. If zoning is preventing density why does Houston with no zoning have a lower population density than Dallas with a larger population and effective zoning? Even Seattle, a very liberal city with a population of 3.5 M has a population density that is only 80% of that in Houston.
If zoning is really a significant factor restricting density, why does data comparing Houston to other US cities not support that thesis.
Posted by: spencer at Apr 28, 2008 9:29:55 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.
Posted by: mobile at Apr 28, 2008 10:05:25 AM
That picture of Sao Paulo is one of the best arguments for zoning I have ever seen. What a nightmare. Does anyone really like sky scrapers? London or Paris are much nicer cities than New York precisely because they have not been conquered (yet) by skyscrapers. And midtown is the most sterile awful part of Manhattan.
Posted by: vanya at Apr 28, 2008 10:10:57 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.)
Posted by: KipEsquire at Apr 28, 2008 10:13:56 AM
Is there something special about 20 story buildings in Sao Paolo? They all seem to be that height. Is it a "sweet spot" in terms of the cost of height vs cost of land or is there some other explanation? (i.e. regulation, geology, etc.)
Toronto sprawls quite a bit and you can buy a house for $500k within walking distance from downtown (which is very cheap for a major city). Yet they're still building dozens of high rise condos, ranging from 30 or 40 stories right up to several 80 story behemoths. Though a quick eye-balling on google maps looks like we're way more dense than Houston.
Posted by: ramster at Apr 28, 2008 10:29:22 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.
Posted by: spencer at Apr 28, 2008 10:40:23 AM
What would happen to Central Park under a scenario without zoning? Would it even have come into existence? I would view that as a huge loss to the city and its liveability.
Posted by: Martin at Apr 28, 2008 10:41:53 AM
I think the answer to vanya's question is: men.
Posted by: mobile at Apr 28, 2008 10:47:20 AM
As a Sao Paulo resident I want to share a few pieces of information. We don't have real skyscrapers here, unless you believe the sky is so low around here. Most buildings have less than 20 stories, the tallest one has a few over 40 stories, the zoning rules forbid tall buildings and in some neighborhoods, like mine, there can be only a few tall buildings, the remaining must be shorter, up to ten stories. In some areas the zoning allows lots of building, but these areas are still (relatively) few and scattered, there are many neighborhoods without many buildings, IIRC we have 20 miles from north to south and 15 from east to west, so there's plenty of room for areas with tall buildings and areas with thousands of houses.
Another thing to notice is that our zoning laws are extensive, complicated, and always changing, we have many places that allow shops in one side of a street but not the other, there are many places without bars nearby because the zoning forbids it, and such. I think Tyler has the wrong information about zoning laws in Sao Paulo. As a piece of anedoctal evidence I live less than 4 miles from a area with many tall buildings, but in a 1 mile radius there are at most twenty buildings, all up to twenty stories high.
Posted by: Daniel Yokomizo at Apr 28, 2008 10:52:51 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.
Posted by: Mo at Apr 28, 2008 11:03:58 AM
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.
You're a regular Yogi Berra, spencer. No one wants to live there anymore, there are too many people. Not sure if you've checked, but cost per square foot is much higher in Boston than it is in the suburbs.
Posted by: Mo at Apr 28, 2008 11:09:03 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.
Posted by: Mercutio.Mont at Apr 28, 2008 11:10:34 AM
It's not zoning, which is usually pretty benign (except in exurbs, where land is often zoned rural out of spite), but planning commissions who are to blame here.
In Seattle, for example, it's now nearly impossible to get a new condo or apartment complex built without ground-floor retail (whether or not it's in a neighborhood where this makes sense), and most neighborhoods tend to have height and parking restrictions. It was only a few weeks ago that the city declared a former Denny's restaurant, abandoned for two years and previously slated to be a monorail station (heh heh heh) a historic landmark because otherwise somebody was going to tear it down and build condos there.
Big cities have become nice, safe places to live again and now everybody who moved to the suburbs is moving back. Go figure.
Posted by: Sean at Apr 28, 2008 11:38:29 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.
Posted by: Reilly at Apr 28, 2008 11:43:07 AM
"In Washington people elect to live in the far suburbs rather then close in because they do not want urban density."
I would imagine that DC's horrid public schools and high housing prices relative to Fairfax, Loudon, etc. have much more to do with it.
Posted by: Colin at Apr 28, 2008 11:43:39 AM
In Chicago, zoning provides substantial income for the city's alderman, if you know what I mean.
Posted by: jorod at Apr 28, 2008 11:54:19 AM
