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New Zoning Regulations Impact Real Estate Market in Downtown City Center

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“The delicate balance between markets and zoning is crucial for promoting economic growth, ensuring social cohesion, and preserving the unique character of our communities.”

In the past, cities would become more densely populated as they grew larger, particularly in the central downtown area. However, some newer cities, like San Jose and San Diego, have managed to maintain a relatively low density even as they have grown in size. Houston, on the other hand, stands as an exception to this trend.

Over the past few decades, Houston has become one of the largest cities in the United States, with a metropolitan area population of over 7 million. Unlike other Sunbelt cities, Houston has fewer regulations on home building, allowing for close-in neighborhoods to become more dense. This has resulted in a housing market that offers a variety of low-cost options for people with different preferences.

However, some housing experts, as highlighted in a report by NewGeography, oppose this approach. They advocate for zoning regulations that limit market forces. They argue that these regulations are necessary to guide development and restrict people’s ability to build housing as they see fit.

It is important to recognize the language used by these proponents of zoning regulations. They try to portray their stance as supporting “the market,” when in reality, zoning is what restricts people’s use of their property and hampers the market’s ability to meet housing demands. Zoning policies ban certain types of housing and prevent market forces from delivering the housing options that the public desires. It is akin to saying that free trade policies ban people from buying American products or that the First Amendment bans people from canceling unpopular speakers.

Opponents of zoning do not seek to “shoehorn” people into dense areas. Instead, they advocate for allowing individuals to choose the type of housing that best suits their needs. Some may prefer high-rise condos in the city center, while others may prefer single-family homes in the suburbs. The free market is the most effective way to determine the appropriate housing density. Generally, market forces will naturally lead to higher density in central areas and lower density in outlying areas.

Zoning regulations have only been in existence for about a century. Thankfully, they did not exist when our country was first developed, allowing for the creation of iconic high-rise neighborhoods in cities like Manhattan and Chicago’s lakefront. Today, even in central Boston, dense townhouse neighborhoods cannot be built in most cities, including the metropolitan Boston area. Ironically, Houston is one of the few places in America where it is legal to build neighborhoods similar to Boston’s Beacon Hill or Back Bay.

Zoning regulations may be well-intentioned, but they often stifle innovation and limit individual choice. Embracing the free market and allowing it to shape housing development can lead to a more diverse and inclusive housing landscape that caters to the needs and preferences of different individuals and communities.

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