This year marks the 100th anniversary of the first zoning laws in the United States. It would be a good occasion on which to begin reversing the damage these laws have done over the decades.
In 1926, the U.S. Supreme Court ruled that the Ohio village of Euclid’s zoning ordinance was constitutional as an extension of the state’s police powers. That principle allows states to enact laws and regulations to enforce public order and govern for the collective welfare of the people.
Regulation of the types of housing and commercial enterprises that people may choose to construct on their own property, however, is significantly different from the protection of public safety, health, and morals that the police powers traditionally covered. Unfortunately, the Progressive movement was in full stride in 1926, and judges became very inventive in expanding government power.
After tentative steps by local governments early in the century, the Court’s decision in Euclid v. Ambler Realty Co. unleashed state and local governments to manage people’s use of their own property for whatever states considered to be the public good. Zoning subsequently expanded into an enormous thicket of laws and regulations specifying what people can and cannot build on their property.
The consequences have been momentous. Zoning has raised the cost of housing significantly, especially by discouraging the construction of starter homes, leading to a housing supply gap of more than 4 million homes in 2025, according to Realtor.com.
Zoning and other regulatory requirements are the major limitation on housing construction, a new paper from the American Enterprise Institute concluded. “In many markets policy-induced costs and local feasibility barriers act as the primary constraint on new housing production and are more binding than capital availability alone,” the paper said.
A study by the Cato Institute found that “rising land-use regulation is associated with rising real average home prices in 44 states and that rising zoning regulation is associated with rising real average home prices in 36 states. In general, the states that have increased the amount of rules and restrictions on land use the most have higher housing prices.”
Land-use regulations directed toward “focusing density and redevelopment” in urban areas, to prevent expansion of cities into surrounding regions — also known as “urban sprawl” — represent perhaps the most ambitious form of zoning.
The regulations drive up housing prices far beyond their costs in less-regulated places, greatly suppress economic development, and increase urban poverty, noted demographer Wendell Cox.
“More restrictive urban planning policies have been associated with undermined housing affordability for the middle class,” Cox wrote. “Given the primacy of housing costs in household budgets, this also means that these restrictive policies, especially urban containment, have been associated with greater overall poverty. Some research even suggests that rigid regulation has taken a heavy toll on the economy.”
Such regulation “reduces the land available for development of middle-income housing in the forms most households prefer (ground-oriented, such as detached, semi-detached, or row houses)” and makes it “all but impossible to profitably build tracts of housing affordable to middle-income households in many markets,” Cox added.
What economists call the “zoning tax” now drives almost 24 percent of the final cost of the average new home in the United States, the Affordable Housing Initiative reported. Zoning costs each homeowner household a shocking $94,000 per unit, the survey by the National Association of Home Builders and the National Multifamily Housing Council found.
This enormous cost arises from decisions by local governments and the voters who install them in office. “In Houston, where land-use regulation is minimal, new homes sell close to their construction cost,” the AHI noted. “In Manhattan, San Francisco, or Boston, the same home might cost two, three, or five times more to buy than to build — not because of materials or labor, but because of what the law prohibits. Minimum lot sizes, height limits, parking minimums, setback requirements, design review boards, environmental impact assessments — each adds delay, cost, and uncertainty that builders must price into the final product.”
Zoning now governs “all things large and small — from where you can live and work to what you can grow in your front yard,” the Institute for Justice observed. The Euclid decision and others over the decades “signed off on some of the government’s worst impulses, acknowledging that local governments could regulate trivial things, like subjective aesthetics, and deeply intimate choices, like who we live with,” the IJ noted.
By limiting supply, local governments’ regulation of property uses and their imposition of mandates for enhancements have been the central factor in the nation’s housing affordability problem.
“A family earning the nation’s median income of $106,800 now needs 36% of that income to cover the mortgage payment on a median-priced existing home ($434,900) and 34% for a new home ($410,700),” Realtor.com reported. The recommended proportion is 28 percent to 30 percent.
The median age of a first-time homebuyer is now 40, up from the late 20s in the 1980s, when the use of the phrase “urban sprawl” first rose dramatically and localities across the country responded by imposing the ever-tighter land-use limitations that have destroyed affordability.
Of course, those who already own homes generally like being able to place preemptive restrictions on other peoples’ property through government action. Having made a large investment in a house and land, it is natural for people to want to protect its value.
The rules that governments impose in response to those desires have become extremely harmful, however, as the statistics indicate.
With the damage having developed into a housing crisis, scholars on both the left and the right are starting to challenge this system. A 2024 paper by constitutional scholars Joshua Braver and Ilya Somin argued that “exclusionary zoning — the imposition of restrictions on the amount and types of housing that property owners are allowed to build — is unconstitutional because it violates the Takings Clause of the Fifth Amendment.”
I agree, and I hope that they will succeed.
In addition to being a judicial flimflam that has overruled people’s property rights across the country, zoning and other intrusive land-use laws and regulations lock millions of people out of the American Dream of homeownership.
A century of zoning is more than enough. Let’s end it now.
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