Tobias Peter & Judge Glock: How Should Zoning Be Viewed & Reformed?

Summary

Podcast Summary: Future of Freedom Episode: Tobias Peter & Judge Glock: How Should Zoning Be Viewed & Reformed? Host: Scot Bertram | Release Date: June 16, 2025

Introduction In the latest episode of Future of Freedom, host Scot Bertram delves into the contentious topic of zoning and housing with two distinguished guests: Tobias Peter, Senior Fellow and Co-Director of the American Enterprise Institute's Housing Center, and Judge Glock, Director of Research and Senior Fellow at the Manhattan Institute. The discussion juxtaposes Peter’s critique of current zoning laws with Glock’s defense of zoning from a free-market perspective, offering listeners a comprehensive exploration of how zoning policies shape housing markets and community dynamics.

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Segment 1: Tobias Peter on Zoning and Housing Scarcity

Timestamp: [00:55] – [15:20]

Zoning as a Barrier to Housing Supply

Tobias Peter opens the conversation by drawing an analogy between the childhood game of musical chairs and the current American housing market. At [01:12], he states:

"In the American housing policy we have a similar approach where we're just not allowing enough chairs to be built... And I think that's inherently unfair."

Peter argues that restrictive zoning and land use laws have created artificial scarcity in the housing market, leading to escalating prices and widespread displacement. He emphasizes that the issue is a policy failure, not a market failure, asserting that the market has the capacity to provide sufficient housing if it's freed from excessive regulations.

Houston: A Model of Successful Zoning Reform

Peter highlights Houston as a success story, noting that since implementing zoning reforms in 2000, the city has expanded its housing stock by 30%. He explains:

"Houston has added 30% to its housing stock. And it is actually amongst the large American cities. Affordable place because you can actually build new starter homes at relatively moderate price points of about $350,000 that are achievable for the average blue collar worker still." [02:04]

The Concept of Filtering

Addressing the concept of filtering—the process by which new housing developments eventually make older housing units affordable to lower-income individuals—Peter illustrates its potential impact:

"By building starter homes at kind of moderate price point is in Houston... then you can actually unleash the filtering process." [04:39]

He acknowledges that resolving the housing shortage won't happen overnight but posits that with the right policies, significant progress can be made within a decade.

Critique of Los Angeles’ Zoning Policies

Peter contrasts Houston's success with the challenges faced by Los Angeles. He criticizes LA's preference for single-family homes and the resultant lack of affordable housing:

"They have been building very few housing units... selling at about a million five and well above the median of $875,000." [06:39]

This restrictive zoning has priced out many residents, forcing them to relocate to more affordable regions or face homelessness—a situation he deems unsustainable and unjust.

Housing Abundance Success Sequence

Peter outlines a strategic framework for addressing housing shortages, dubbed the Housing Abundance Success Sequence:

1. Allow Moderately Greater Density: Roll back restrictive zoning rules to permit higher-density housing.
2. Make It Buy Right: Remove discretionary powers that enable NIMBYism and bureaucratic delays.
3. Keep Land Use Rules Simple: Apply the KISS principle to streamline permitting and reduce construction costs.

"If you've done these three things, all of these, what we found in all of these instances is that we've seen armies of small scale builder coming out of the woodwork and starting to build housing units that otherwise they would not have." [13:38]

Peter emphasizes that these measures can unleash the market's potential to build diverse and affordable housing, as evidenced by multiple case studies.

Conclusion of Tobias Peter’s Segment

Peter concludes by asserting that the primary solution to the housing crisis is to build more homes swiftly by alleviating government regulatory constraints:

"It is, but I think the government, I would add that the government needs to get out of the way. This is a government regulatory failure." [15:20]

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Segment 2: Judge Glock on Defending Zoning from a Free-Market Perspective

Timestamp: [16:19] – [32:28]

Zoning as a Tool for Local Governance

Judge Glock begins by addressing common free-market criticisms of zoning, advocating for a nuanced view:

"People with free market beliefs should be concerned about zoning and excessive zoning, but they should not necessarily look to abolish it everywhere and anywhere because it does serve some purposes." [16:36]

He underscores that zoning allows communities to self-regulate and maintain certain standards, aligning with consumer demand for orderly and well-maintained neighborhoods.

The Thiebaud Model Explained

Expanding on governance models, Glock introduces the Thiebaud Model, articulating how decentralized local governance can effectively manage public goods:

"Charles Thiebaud... described this kind of choice of governance model... he said, we don't have a market mechanism to allocate public goods such as police, roads and parks... allow people to effectively select into the sort of governance model they like." [19:27]

This model supports the idea that diverse local governments can cater to varying preferences, enhancing overall efficiency and satisfaction.

Zoning’s Impact on Property Rights and Affordability

Glock challenges Peter's assertion by suggesting that zoning, when correctly implemented, can enhance property values and, indirectly, housing affordability:

"The goal should actually be to maximize the value of housing... by improving the condition of the neighborhood, that's a good thing, not a bad thing." [29:16]

He argues that proper zoning ensures high-quality developments that contribute to the community, rather than simply restricting supply.

Balancing Local and State Control

While acknowledging the benefits of local zoning, Glock also recognizes its shortcomings, such as the potential for majority groups to marginalize minorities. He advocates for state-level oversight to ensure zoning serves its intended purposes without abuse:

"You need courts and other kind of rules to limit that sort of expropriation at the local level." [23:40]

Zoning and Greenfield Development

Addressing California’s housing issues, Glock points out that restrictions on greenfield growth—development on previously undeveloped land—compound affordability problems:

"About 80% of new housing development was in these greenfield areas... environmentalists have closed off an immense amount of space for development in the Bay Area." [25:22]

He emphasizes the importance of leveraging greenfield areas to alleviate housing shortages.

Homeowners Associations as Market Mechanisms

Glock defends homeowners associations (HOAs) as market-driven entities that reflect residents' desires for neighborhood control:

"There's a strong demand for them, which seems to be that kind of development is meeting a clear consumer demand." [16:20]

He contrasts HOAs with municipal zoning, suggesting that market-driven regulations can be more responsive and efficient.

Conclusion of Judge Glock’s Segment

Judge Glock concludes by reiterating the importance of maintaining a balance between local autonomy and state oversight to ensure zoning policies promote both community values and housing affordability:

"We should allow people to choose the sort of governance they want to live in... allow for some areas to not be zoned." [24:58]

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Final Thoughts

The episode of Future of Freedom presents a robust debate on the role of zoning in addressing housing challenges. Tobias Peter urges for deregulation to unleash market solutions and increase housing supply, highlighting successful examples like Houston. Conversely, Judge Glock defends zoning as a necessary tool for local governance and community control, advocating for balanced oversight to prevent abuses. Together, the discussions encapsulate the complexities of zoning reforms and their far-reaching implications for freedom, property rights, and social equity.

Listeners gain valuable insights into how zoning policies can either exacerbate or alleviate housing shortages and affordability issues, depending on their design and implementation. The contrasting perspectives of Peter and Glock underscore the need for nuanced approaches that consider both market dynamics and community preferences.

Notable Quotes:

• Tobias Peter at [01:12]: "In the American housing policy we have a similar approach where we're just not allowing enough chairs to be built... And I think that's inherently unfair."

• Tobias Peter at [04:39]: "By building starter homes at kind of moderate price point is in Houston... then you can actually unleash the filtering process."

• Judge Glock at [16:36]: "People with free market beliefs should be concerned about zoning and excessive zoning, but they should not necessarily look to abolish it everywhere and anywhere because it does serve some purposes."

• Judge Glock at [19:27]: "Charles Thiebaud... described this kind of choice of governance model... allow people to effectively select into the sort of governance model they like."

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About the Guests:

• Tobias Peter: Senior Fellow and Co-Director of the American Enterprise Institute's Housing Center. Author of the essay "Displacement by Design."

• Judge Glock: Director of Research and Senior Fellow at the Manhattan Institute. Author of the essay "Two Cheers for Zoning."

Stay Connected: To explore more episodes of Future of Freedom, visit Apple Podcasts, Spotify, or your preferred audio platform. For additional resources, visit Franklin News Foundation.

Transcript

[Judge Glock]

Foreign.

[Scott Bertram]

Welcome to Future of Freedom. I'm your host, Scott Bertram. Future of Freedom is a production of Franklin News Foundation. To support this show, go to franklinnews.org donate we bring you interviews today from different sides of the debate over zoning and housing. In a little bit we'll be joined by Judge Glock, Director of research and Senior Fellow at the Manhattan Institute. First we talk with Tobias Peter, Senior Fellow and Co Director of the American Enterprise Institute's Housing center, aei.org you can also find him on xobiaspeteraei and a recent essay at theamericanenterprise.com displacement by design Tobias, thanks so much for joining us.

[Tobias Peter]

Thank you for having me.

[Scott Bertram]

Scott Talking today about zoning and housing in that essay, Displacement by Design early you argue that zoning and land use laws have locked in scarcity and locked in ever rising prices. What's the quick connection between those two things?

[Tobias Peter]

Yeah, I mean the quick connection is, and we make that point in the article is everyone probably, probably knows the game musical chairs. Everyone played it as a child and the rules are very simple. There are fewer chairs than there are players. And when the music stops, everyone has to scuttle around to find a spot. But of course someone will end up standing because there are not enough chairs. And so the game is designed for someone to lose. And they're losing not because they're not fast enough, it's just because the design was poorly poor. And in the American housing policy we have a similar approach where we're just not allowing enough chairs to be built. And as a result we have people either living in their parents basements or they're getting pushed out entirely into shelters or into living in the streets. And I think that's inherently unfair.

[Scott Bertram]

I want to ask if there is a difference, should there be a difference in the approach? If we look at it from the, from, from housing aspect, from the perspective of say, homelessness or the perspective of say, not quite the right home or not the home in the right place. Is there a difference between solving those two problems?

[Tobias Peter]

Yeah, I mean, I think that the solution is pretty simple once you realize that this is a policy failure and not a market failure. The market would be providing enough housing if we were to unshackle the market from its, from its zoning rules and other regulations that impose costs and make have made buildable landscarce and have made homebuilding expensive. And there are plenty examples from around the country. In the article I highlight, I and my co author Eason Frisel with the Salvation army, we highlight Houston and Houston in 2010 realized that it had really high levels of homelessness and it was unacceptable to them. But then they came around and implemented zoning reform that first in 1998, they had done it in a small part in the inner loop of the city. They expanded it to the entire city and they reduced the minimum lot size from 5000 square feet down to 1400 square feet. And since 2000, Houston has added 30% to its housing stock. And it is actually amongst the large American cities. Affordable place because you can actually build new starter homes at relatively moderate price points of about $350,000 that are achievable for the average blue collar worker still. And by building so much housing, we unleash filtering, which is the process where older housing gets freed up when people move into newer housing and they free up that older housing unit for someone else. And we know that process quite well, the new and used car market, where not everyone can afford to buy a new car, but through process of filtering, everyone ends up with a serviceable car, who wants to, who wants a car. And the same would happen in housing if we were to allow the market to respond.

[Scott Bertram]

You mentioned filtering and I do want to ask about that. This idea that by purchasing new homes that other homes open for others, how long does that process take? Can that help people struggling right now or in the next few years? How long does that take?

[Tobias Peter]

Yeah, I mean this, this housing shortage that we have, it's estimated anywhere from 4 to 8 million housing units that's been building for decades. And so we shouldn't expect the shortage to be solved overnight. It's going to take, it's going to take a decade probably to solve it. But with the right policies, we can solve it over a decade. We just need to start somewhere. And of course with filtering, for example, if you think about new and used cars, the filtering process takes a lot longer. If you're only building Ferraris, Ferrari is very expensive and not many people can afford new Ferraris. Hence you're not going to be building many new Ferraris. And hence the filtering process is going to take a long time until a Ferrari filters down to someone low income. On the other hand, if you're building Toyota Camrys, Honda Civics at 30,000, 35,000 doll, then the filtering process is much quicker because the way down to the bottom of the income spectrum is much shorter. And because many people can afford those cars for 30, $35,000, you can actually build a lot of new cars and kind of in housing, we have this conundrum where we are basically only allowing the Ferraris, the housing Ferraris to be built in McMansions. And of course if you're only building McMansions, the filtering process is going to. But by building starter homes at kind of moderate price point is in Houston at about $350,000, then you can actually unleash the filtering process.

[Scott Bertram]

If Houston's an example of a place where things are done right. In your perspective, your opinion, Los Angeles. In the essay Displacement by [e-mail] Los Angeles is mentioned as a place that's perhaps done things wrong. You say Los Angeles has entered a doom loop because of low, no barrier supportive housing policies and their expanded shelter system. So what in your perspective have they done so wrong?

[Tobias Peter]

Yeah, I mean, Los Angeles is on the other end of the spectrum. And it starts again, it starts with housing policy. And Los Angeles is primarily zoned for single family homes. And as a result they've been building very few housing units. And they've been building about 19,000 since 2014. They've been building only about 19,000 McMansions. And these McMansions, they sell at about a million million five and well above the median of $875,000. That's the median priced home in Los angeles. Of course, $875,000 is very expensive if you are kind of a service in the service industry. So you're never going to be able to afford even the medium priced home. And hence because this housing pressure has been building in Los Angeles where people are just being priced out, they are moving to other places, primarily Riverside or Las Vegas or Phoenix, they're being pushed out where when other people that don't, that can't move, they're being pushed into shelters and, or living on the streets and kind of that's not the right approach.

[Scott Bertram]

You argue that the private market building like in Houston can help with filtering and allow more lower priced housing options. That is the case in Houston, as you explain. What if there are markets, cities where that's not the case, where there are builders who aren't interested in building either, say in particular neighborhoods or at a particular price point. How do we still make sure housing is available for all who need it?

[Tobias Peter]

Yeah, I mean, I would push back against that notion. And I think the market would be building exactly the housing that's needed at exactly the price point that people can afford if it were allowed to. And in our work we've actually studied over a thousand counties where we looked at the relationship between density and home Price. And in all the places where they allowed moderately greater density, we found that the price point was. Was lower for the re for the main reason that a. If you are. If the lot size is smaller, land is of course costly. So you have one cost saving. The second cost saving is oftentimes the home that is being built is proportional in size to the lot. So if you have a large lot, you have to put a large home on it. If you have a smaller lot, you're going to put a smaller, smaller home on it. And particularly if you're building. If you're allowing townhomes to be built, townhomes oftentimes are cheaper to produce than single family detached housing because they share a wall with another unit and hence you have fewer windows. You don't kind of, you may be not needing the highest and highest quality finishes. So there's a lot of cost savings that come with allowing moderately greater density. And what we've seen in our work is that anytime you allow the to build at moderately greater density, the market builds at moderately greater density. The problem is that we're not allowing builders to build at moderately greater density. And it's not that the builders want to build only expensive housing. They're building expensive housing because that's the only thing they can do. Oftentimes they can make more profit by building smaller housing units on the same amount of land. Because, for example, if you can fit four townhomes on one parcel, you can sell these townhomes, say for half a million each, versus if you're building a single family detached home, you could only sell that maybe for a million and a half. So you actually making more profit by selling the four townhomes for a million versus the one single family detached home for a million. 5.

[Scott Bertram]

There are current residents of neighborhoods or of cities who perhaps have objections. They don't want to change the character of a neighborhood. They don't want dense developments for whatever reasons might there be. What rights do they have? Or do they have rights to say no to those types of developments nearby?

[Tobias Peter]

Yeah, I mean, I think we need to go back to first principles. And the first principles are number one. In the U.S. constitution, we have two sovereigns. The first one is the federal government, and the second one are the states. And localities or individual neighborhoods are not mentioned there. So I think there's a strong argument to be made for state preemption on zoning. And many, many states, California, Washington, Oregon, Montana have recently passed laws at the state level allowing moderately greater density. The second argument against local control is we need to understand the history behind zoning. And zoning came into place in the 1920s when the go was by the elites, by the progressive elites at the time, to keep lower income, mostly black and eastern and southern European immigrants out of their neighborhoods. And they initially tried to do it explicitly through race or ethnicity. And the Supreme Court said, you can't do it that way. So they came up with this workaround where they knew that if we can make housing just a little bit more expensive, we can price all these low income folks out of our neighborhoods. And a way to raise the price of housing in their neighborhoods was we just to allow, just no longer, just no longer to allow housing types that are generally more affordable, like duplexes or townhomes. And we're still living with these repercussions from the 1920s when at the behest of the federal government, this was rolled out across the fruited plain. And you know, now we have sky high home prices, a huge housing shortage and a massive homelessness problem. And it's just, as I said before, it's just not, it's just not the right way of going about it. And the final argument, which I think is the strongest argument, is about property rights. You as an owner of a parcel, you have rights to do with this property what you want, of course, within reason, but to give the neighborhood and the community rights over what you can do with your property. That is, we have really bastardized this concept of property rights and turned it into communal rights, which is very far removed from what our Constitution says.

[Scott Bertram]

In this essay, Displacement by design, at theamericanenterprise.com, you lay out what's called the Housing Abundance Success Sequence. What's entailed in that?

[Tobias Peter]

Yes. Excellent. So we have done about 20 or more case studies just where cities or states just like, like Houston have at some point in time liberalized their zoning regimes. And in all of these instances, when they've implemented the Housing abundance success Sequence, they had an explosion in housing units. And the housing abundance success Sequence has three pieces. The first one is you need to allow moderately greater density, so roll back your zoning rules. The second is you need to make it buy right. So you need to take away the discretion, the discretionary power that employ enables the NIMBYs, the not in my backyard types, and the local politicians and the planners to impose additional cost and delay projects. And the third thing is you need to keep the land use rules short and simple. Follow the KISS principle. And you need to make home building, you need to keep the costs down and the permitting faster. And if you've done these three things, all of these, what we found in all of these instances is that we've seen armies of small scale builder coming of the woodwork and starting to build housing units that otherwise they would not have. And in the case of Houston, in a relatively short period of time, they've added 30% to its housing stock. We're finding the same in Denver and we're finding the same in Palisades Park, New Jersey, in all these other places that we've studied in Seattle, anywhere else where this has been tried, this has worked and has been a success. And this really points to where the solution is to a housing shortage.

[Scott Bertram]

At the end of the day, Tobias, is the answer as simple as build more homes as quickly as possible?

[Tobias Peter]

It is, but I think the government, I would add that the government needs to get out of the way. This is a government regulatory failure. We need to unleash the market and then the market can build as many housing units as needed.

[Scott Bertram]

Tobias Peter is Senior fellow and co director of the American Enterprise Institute Housing center, aei.org Find him on xobiaspeter AEI and his essay Displacement by Design at theamericanenterprise.com Tobias, thanks so much for joining us here on Future of Freedom.

[Tobias Peter]

Thank you, Scott.

[Scott Bertram]

Now to hear another side of the argument about housing and zoning, we talk with Judge Glock, Director of research and Senior Fellow at the Manhattan Institute, and also on X at Judge Glock, a recent essay at American Affairs. Two cheers for zoning. Judge, thanks so much for joining us.

[Judge Glock]

Thanks so much for having me on.

[Scott Bertram]

Appreciate you making time today as we talk a bit about zoning and housing. In this essay over at American affairs, you say that those who subscribe to free market beliefs should not despise zoning. Why not?

[Judge Glock]

Well, there's a few reasons. I think. Importantly, people with free market beliefs should be concerned about zoning and excessive zoning, but they should not necessarily look to abolish it everywhere and anywhere because it does serve some purposes that I think those of us who enjoy and appreciate free markets would be supportive of. First, I think it's worthwhile to mention that the idea that a local body of some sort should have control over the neighborhood is fairly widely accepted. So I point out in that essay that the large majority of new housing developments in America are actually associated with some sort of homeowners association or condominium or some sort of collective property organization at which the collective of owners in this group often have an immense amount of say about how Property is developed, how it looks, how often you maybe have to mow, and so forth. And I think most even extreme libertarians would be supportive of this because these are entered into unanimously. If you buy into a new project, you buy into that homeowners association, and there seems to be a strong demand for them, which seems to be that that kind of development is meeting a clear consumer demand. Now, there is some questions on the margin about, well, how much of these are occasionally mandated by the local or state governments to take care of some utilities. And that may be true, but clearly the desire of people to have some amount of control over their neighborhood is being expressed through the market, and we should be understanding of it. And then briefly, I'll just point out that a lot of zoning in especially suburban areas in America works in a similar fashion in that people move to a zoned municipality out of their free will. Often the city was zoned when it was very small, and the large majority of people that are in that moved into that because they liked the benefits of that kind of community that was being created by zoning. And some people would say, well, you know, they didn't have a choice. But one of the things in America is that we actually have something like 19,000 city governments, 3,000 counties, lots of these local governments to choose from. And in general, supporters of free markets should allow people to choose the sort of governance they want, which is one of the benefits of the American system relative to the other. And sometimes that governance will include zoning.

[Scott Bertram]

You discuss early on this idea of the Thiebaud model. What is that?

[Judge Glock]

So, yes, Charles Thiebaud was this great economist, little appreciated in his time, but he wrote a piece in the 1950s that described this kind of choice of governance model that I was just alluding to. So he said, we don't have a market mechanism to allocate public goods such as police, roads and parks that we all agree the government in some way shape or form needs to provide. So how should we decide how to provide those public goods? Now, you had a lot of very smart economists at the time, like Paul Samuelson and others, saying that, well, you know, the government should do a cost benefit analysis and look how the finances go and decide the right level of parks and so forth. And Thiebaud interestingly said, no, if you have a diversity of local governments, you should allow people to effectively select into the sort of governance model they like, where some people would like more parks and slightly higher taxes, or some people would be less concerned about policing and like lower policing levels. For lower taxes and so forth. And you know, as he and subsequent researchers shows, that the American system like this works pretty well, that we have a lot of local governments that offer diversity of models for people to select from, and that diversity of models importantly keeps government more efficient. There's some good evidence that areas with more competing municipalities have more effective and efficient public goods provision than those with a big centralized governance model. And so, you know, we again, and the more free market community often talk about how can we establish independent governance models that are outside of the centralized state. And I often want to tell people, at least in some not so insignificant fashion, Americans are doing this right now. They're picking the sort of governance they want to live in. And the American local government system on the whole works pretty well.

[Scott Bertram]

Some would look at regulation, these zoning laws, and say that they're saying, what you can't do, you can't build here, you can't do this, can't do that, and are precluding growth, obstructing growth in particular areas. Is that a wrong way to look at the way zoning works?

[Judge Glock]

No. So as I mentioned at the beginning, people should be rightfully suspicious of the extent of zoning laws. And there's no doubt that contemporary zoning is driving up housing prices and in many areas is far past a level that I think most people would consider an efficient amount of zoning, which is supposed to kind of balance the desire for local control over who enters and leaves a certain area and balance property taxes with the public goods provided, which is one of the purposes of zoning in the now traditional Thibaut model. But these governments, even if they are freely chosen by Americans, have the same problems as all governments do in that they are time inconsistent. They often say they want to respect property rights or only do a reasonable amount of zoning early in their life, but later on they find ways for majorities to expropriate the property of minorities. So ideally you have state or higher level systems, courts and so forth that find ways to cabin the zoning to make sure it is providing its purpose of allowing people to kind of match property taxes with local public goods and not being used by a majority to just expropriate the property of a minority, which unfortunately happens all too often to America, often to farmers, and that an area is developed, a group of farmers wants to develop their land just to the level of density the rest of the community is already doing, but the rest of the community says no, we can just take the development rights from that farmer and therefore protect our property values and so forth. And so you need courts and other kind of rules to limit that sort of expropriation at the local level.

[Scott Bertram]

The non, you know, non zoned areas sometimes are those suburban areas, sprawling, low density areas. Does that lead to barriers to affordability in some way?

[Judge Glock]

It could if people didn't have alternative options or models of governance. So, and a lot of those sprawling, technically no zoned areas, there are these homeowners associations that discussed where again, the area, often the collective body has an immense amount of power over property, far more than any, you know, municipal government in the United States. You know, they'll tell you how you can paint your mailbox and that kind of, that kind of stuff. And again, people really select into that. So whatever we personally may feel about that, we should allow the market to speak there. And, you know, we should also allow for some areas to not be zoned. So just like a lot of people tend to like zoning and tend to like the benefits that it can bring, we should also understand that some people weigh the cost and benefits and decided against it. And we should allow those communities to arise, as they definitely do, especially on the fringes of American cities, for people who don't want the zoning model. And that's an important part of that, that ability to select your kind of governance that I think is underappreciated.

[Scott Bertram]

Judge Glock is with us. You can read his essay two cheers for zoning at American Affairs. You discussed California, the housing problems in California, and the problem might not be what we think it is. You've discussed these greenfield areas and the forbidding of greenfield growth in California. Why does that lead to issues?

[Judge Glock]

Yeah, so I. One of my frustrations with the zoning debate and what a lot with the people known as yimbys, the yes in my backyard group of whom I'm generally supportive, is that they seem to be solely focused on how to densify existing urban areas. But the fact of the matter is, the vast majority of new housing development America, it's what's known as greenfield. It's in an area that has been built up before, generally on the fringes of cities. And insofar as we need more building to happen, that's where we're likely going to get it. I cite an EPA study which showed that about 80% of new housing development was in these greenfield areas. And yet greenfield doesn't attract the attention I think it deserves in the housing price debate. So I point out a lot of things went wrong in California that's prevented this greenfield development. One is simply that the state government has Effectively expropriated property taxes from the local government. Those people who say, oh, it's inequitable for a local government to fund itself off property taxes, and they basically centralized it all at the state level. Well, what that meant is that property tax, which was a way for a local government to benefit from more housing to offset the cost of new development, disappeared, and now they don't get the most of the benefits of growth, which just like you want incentives aligned for any business, you want a governance to have good incentives, including to grow. And taking that away had a big problem in California. And second, just the environmentalists have closed off an immense amount of space for development in the Bay Area, which is by some measures the highest housing prices in America. You see more than a third of all land basically being pasture land, which is insane when you consider a single acre can cost millions of dollars in this region. You could really build a lot outwards that people don't appreciate when they're just talking about upzoning in the cities as necessary as that is.

[Scott Bertram]

How can local zoning or how does local zoning work with county mandates, state mandates? Where should that ultimate sort of responsibility lie?

[Judge Glock]

So I think the responsibility should in the main remain in these local governments. There are some people who think if we centralize all zoning decisions, that that will lead to a more free market decision sort of end result. I point to some studies that show in European countries with more centralized zoning control, you tend to actually have less housing production than America or other decentralized countries where the local control is predominant. So I think you do need the state to set guardrails. You need the courts, again to police local governments. The state occasionally needs to mandate some development where the local government is just refusing to do it. But I think one of the main things that the state and local government should do is just make sure incentives are aligned. If a local government raises money, property taxes or other taxes from new development, we should allow them to do that. We should say, hey, that's telling. That's giving a signal to those local elected officials who again, have to be competitive with other municipalities in their region to allow the sort of development that's going to improve values and governance for everybody. And that's what we want to do. We want to try to make these local governments more like freely chosen companies, which is the way to make them more like the private sector and less like the public sector.

[Scott Bertram]

We talked a bit about affordability previously. Would zoning in some way, used correctly, help to make housing more affordable?

[Judge Glock]

Well, it's tough. So There's. I think there's one thing that is interesting in the affordability debate that gets lost, and that is people assume that the goal should always be to minimize the value of housing. And in some sense the goal should actually be to maximize the value of housing not by restricting the total amount of housing, but by making that piece of housing more valuable. So just like a monopolist, if you cut off, if that monopolist cuts off the supply of something, they make the individual unit. They're selling the widget more pricey, but they actually have less total value because they're selling less supply. And there's a similar sort of dynamic in zoning in that you want zoning to maximize the total value of housing and land because if people are willing to pay more of that because it improves the condition of the neighborhood, that's a good thing, not a bad thing. But if you have zoning that's acting more like a monopolist, that's increasing the value of land, not by improving amenities, improving the value of a housing product or a neighborhood or so forth, but it's shutting off competition that's increasing the price of an individual house and driving the cost of housing, even as it lowers the total value of housing that could have been created if we, if we had more housing out there. So, you know, I think zoning appropriately does raise prices if used well, but raises prices in a way we'd actually want it to, which is by improving the value of the product. Unfortunately, right now, zoning often does the opposite. It attempts to monopolize and drive down the total supply.

[Scott Bertram]

Does zoning in a way also give homeowners a sense that they can change things if needed in the future? Maybe it's right now, but it won't be right ten years from now. There's an ability to change that zone.

[Judge Glock]

Yeah. So there's some people, of course, who would like a kind of permanent contract. Because there's a lot of literature in governance, of course, about how can we get cities and state or even federal governments to be time consistent, Meaning what they promise in time A, they still carry out in time B. But I think the reason, again, even in these freely chosen homeowners associations, you have a certain amount of discretion is the under is that people understand things are going to change and you want them to be able to change if necessary. Maybe you need a super majority vote on the homeowners association to change or something else. But the market in one sense has spoken that people want some amount of discretion and they want some amount of control over the locusts and shape of their neighborhood. Now, again, that can go too far. But I'm willing to listen to kind of the voice of the market here and say that zoning or local control of property is meeting some amount of demand from the home buyers.

[Scott Bertram]

Judge Glock is director of Research and Senior fellow at the Manhattan Institute. You can find him there. Also on X Judge Glock and this piece, Two Cheers for Zoning, available at American Affairs. Judge, thanks so much for joining us here on Future of Freedom.

[Judge Glock]

Thank you so much, Scott. It was a pleasure to talk to you.

[Scott Bertram]

We thank both of our guests for joining us. Tobias Peter, senior fellow and co Director at the American Enterprise Institute's housing center, [e-mail] and Judge Glock, Director of Research and Senior Fellow at the Manhattan Institute, Manhattan Institute. To find additional episodes of Future of Freedom, go to Apple Podcasts, Spotify or wherever you get your audio. Thank you for listening to Future of Freedom, a production of Franklin News Foundation.