Demonstration article

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When people ask why homes are expensive, the conversation usually turns to interest rates, investors or construction costs. All of those matter. But underneath them sits a less visible layer of rules that determines what may be built, where, and at what density. In many cities, that layer does more to shape the housing market than any single buyer or lender.

Zoning codes divide land into categories — residential, commercial, industrial — and then attach detailed conditions to each. Minimum plot sizes, height limits, required setbacks from the street, parking requirements and caps on the number of units per building all constrain what a developer can put on a given piece of land. Each rule may have a sensible origin. Together, they can make it legally impossible to build anything other than detached houses across large parts of a city.

Why supply responds slowly

Economists describe housing supply as inelastic when construction does not keep pace with rising demand. Some of that inelasticity is physical: water, hills and existing buildings limit where homes can go. Much of it, though, is regulatory. Where rezoning requires lengthy hearings and each project can be challenged, builders face delay and uncertainty, which raises costs and deters smaller firms from entering the market at all.

A city can welcome newcomers in its rhetoric and turn them away in its zoning map.

The politics are difficult because the costs and benefits fall on different people. Existing residents bear the disruption of new construction nearby — more traffic, taller neighbours, a changing streetscape — and they vote locally. The beneficiaries of extra housing are often people who do not yet live in the area and so have no voice in its planning meetings.

The reform toolkit

Common approaches to zoning reform

Upzoning: allowing more units or greater height on land already designated for housing.

By-right approval: letting projects that meet published rules proceed without discretionary hearings.

Parking reform: removing minimum parking requirements so land can be used for homes instead.

Gentle density: permitting duplexes, townhouses and small apartment blocks in former single-house areas.

Critics of deregulation raise fair concerns. New supply does not always arrive where it is most needed, infrastructure such as schools and transit must keep up, and some neighbourhoods fear that change will displace long-standing residents rather than help them. Supporters reply that blocking construction does not protect affordability; it simply allocates scarce homes to whoever can pay most.

The useful question for any city is therefore not whether to regulate land use, but which rules serve a clear public purpose and which merely preserve the status quo. Answering it requires looking past individual projects to the cumulative effect of the code as a whole.