Matt channels Ed Glaeser, pointing out that over the last 50 years, the ability of local groups to block upward development through zoning and other legal restrictions has massively raised the price of housing in urban cores, pushing families who might like to live more densely further and further away in search of affordable housing. This, of course, makes them pollute more as they drive to and from their distant jobs. He sensibly suggests that one way to rectify this problem is to loosen zoning restrictions. Horrified commenters declare that the solution to zoning is not to end it; we just need to do it right.
Allow me to channel another very smart economist, Milton Friedman, from his brilliant book, Free to Choose:
When one of us suggested in a Newsweek column . . . that for these reasons the FDA should be abolished, the column evoked letters from persons in pharmaceutical work offering tales of woe to confirm the allegation that the FDA was frustrating drug development. But most also said something like "In contrast to your opinion, I do not believe that the FDA should be abolished, but I do believe that its power should be changed in such and such a way."A subsequent column . . . replied:
What would you think of someone who said, "I would like to have a cat provided it barked"? Yet your statement that you favour an FDA provided it behaves as you believe desirable is precisely equivalent. The biological laws that specify the characteristics of cats are no more rigid than the political laws that specify the behavior of governmental agencies once they are established. The way the FDA now behaves, and the adverse consequences, are not a result of some easily corrected human mistake, but a consequence of its constitution in precisely the same way that a meow is related to the constitution of a cat. As a natural scientist, you recognize that you cannot assign characteristics at will to chemical and biological entities, cannot demand that cats bark or water burn. Why do you suppose the situation is different in the social sciences?The error of believing that the behavior of the social organism can be shaped at will is widespread. It is the fundamental error of most so-called reformers. It explains why they so often feel that the fault lies in the man, not the "system"; that the way to solve problems is to "turn the rascals out" and put well-meaning people in charge. It explains why their reforms, when ostensibly achieved, so often go astray.
The declarations that zoning is fine in concept, just not in practice, are daffy, but sort of charming, like finding out that your greengrocer believes in fairies. After all, it's not as if the density restrictions are some odd fluke that has arisen only in Washington DC for mysterious reasons now lost in the mists of time. Every single place you go on the East Coast, from the far flung exurbs to the heart of Manhattan, the zoning regulations all do the same damn thing, which is keep developers from building upwards in order to match the supply of convenient housing in desireable neighborhoods to the demand for same. Everyone has different explanations for the reasons that no dense housing or commercial developments should be anywhere near their house, but regardless of the stated reason, the behavior never varies. This has led me to discard all of the explanations offered by my friends and neighbors in favor of two simple, yet surprisingly powerful rules.
1) When there are fewer houses in a neighborhood, each house is worth more, particularly if those houses are located on side streets without commercial development.2) People who own houses will act 99% to maximize the value of the house, and 1% to maximize whatever ideological values they may hold about things like property rights, commercial development, environmental sustainability, and housing for the poor.
If you do not want restrictive zoning keeping developers from putting up denser housing, then you need to downgrade the power of the zoning boards. The solution is not to call for changes in the zoning code, because from the perspective of the people who write it, the zoning code is working perfectly. That is, it is pushing up property values by keeping other people from doing anything near your house that might lower its value--like, for example, live there.
Matt's commenters also pointed out that Houston isn't exactly a walkable urban paradise. Do you really have to balance every sane post with a ridiculous one just to reassure the Econ 101 crowd that you're still with them? And do you really think that Friedman was right about abolishing the FDA? "The error of believing that the behavior of the social organism can be shaped at will" does not justify the equal and opposite error of believing that the behavior of the social organism cannot be shaped at all.
Every single place you go on the East Coast, from the far flung exurbs to the heart of Manhattan, the zoning regulations all do the same damn thing, which is keep developers from building upwards in order to match the supply of convenient housing in desireable neighborhoods to the demand for same.
What on earth are you talking about? Along much of the East Coast, zoning regulations do nothing of the sort. Rather, they prevent developers from splitting up very large lots (farm-sized or estate-sized) into tract-housing-sized subdivision lots, while encouraging developers in central town zones to build higher. The whole point is to encourage a differentiation between dense cores and wide-open countryside, and between residential and commercial areas.
The areas in the US that have the least sprawl have achieved it through zoning. The areas that have the worst sprawl have no zoning. The countries that have the least sprawl have the most zoning. The countries that have the most sprawl have the least zoning. Obviously the answer to defeating suburban sprawl is to...eliminate zoning! What planet do you live on?
I'm not aware of any significant upzoning that has taken place in any inner suburbs, or indeed, any East Coast city, since the changes in the legal and regulatory climate discussed by Ed Glaeser . . . but perhaps you have data I don't?
I should add that I have lived in three out of the five major cities on the East Coast, and the pattern you describe doesn't, as far as I know, exist in any of them. Upzoning is a forgotten art. Stuff is being built in areas that were upzoned twenty or thirty years ago, but those town centers aren't encouraging new, dense development. No one who has watched the towns in Jersey play the exciting game of "affordable housing musical chairs" could possibly recognize your idealized description as the way things actually work. Moreover, I'm not sure where these vast exurban tracts of farmland you're discussing are located, but I certainly haven't run into them anywhere within reasonable commuting distance of New York, DC, or Boston. Perhaps Wilmington has mastered the zoning problem, but I'm not sure their model will be replicable.
I can't figure out why the SF Bay area has so few high rises when San Diego has so many. They've declared the old "gaslight district" trendy and there must be dozens of high rise condo complexes around that area. In the San Jose area, there's nothing but sprawl in all directions.
It can't be earthquake risk, since I think both cities are subject to that. Is San Diego just more Republican and more pro-growth?
Are you talking exclusively about cities? Because that rather restricts the issue, doesn't it? Zoning and town planning are used in communities of every size. Across the East Coast, the areas that have town centers do because they're zoned to encourage it. Areas that don't employ much zoning have no town centers; they're unbroken subdivisions punctuated by strip malls and Walmarts.
If you're trying to say that urban centers should be more high-density and that neighborhood biases towards retaining old low-rise zoning should be weakened, that's fine. The recent battles on the Upper West Side over the advent of high-rise residential towers are a good case study. But just saying "zoning should be eliminated" is ridiculous. On the UWS, there are a lot of buildings that could happily make way for high-rise residential complexes (including the crappy 8-story I used to live in), but the brownstones are a city treasure; they're part of the reason why walking and shopping in the area is such a pleasure, which is why people want to buy those high-rise apartments in the first place. The same goes for several important churches in the area.
You started your post talking about the inappropriate zoning of an area of eastern NW DC. Maybe that area is zoned inappropriately. But eliminating all zoning would lead to high-rise development in much of Georgetown. Do you see that this would be bad for the city?
Didn't the Supreme Court case Euclid v. Amber Realty Co. establish the validity of zoning as an extension of police power? How, then, can this be "downgraded"?
Zoning laws are the result of a struggle between two groups of people controllers. One group wants to fight congestion by reducing population density in crowded areas and the other wants to fight sprawl by reducing population density in uncrowded areas. Sometimes the two sides cooperate and pass BANANA (Build Almost Nothing Anywhere Near Anything) regulations. The resulting housing shortage is blamed on greedy landlords and used as a pretext for more regulations.
Maybe we should let people make their own decisions about where to live.
I think Americans should have to visit a city such as Sao Paulo or Cairo before they start complaining about things like zoning or pollution.
Sao Paulo is odd in that you can find, for example, a fairly high-end high rise hotel across the street from a bodega in a neighborhood that is the equivalent of, say, New York's Washington Heights.
As for pollution, you can literally taste it in the air in Sao Paulo. It's full of real pollutants like carbon monoxide and probably sulfur and lead, like our air used to be decades ago.
You know, in Econ 101, they do teach about a thing called "externalities." Somebody building a high rise next to my house imposes externalities on me, in terms of traffic, parking, noise, loss of privacy in my back yard, etc. Why should some highrise developer get to steal the sunshine from my yard for free? Maybe there is a better way than zoning, but this is a very real issue.
"Why should some highrise developer get to steal the sunshine from my yard for free?"
Why should your owning a one-story house give you a permanent veto on any more efficient use of the land surrounding it, which you yourself do not own?
What property owners think of laissez-faire property rights tends to depend on their self-interest, which generally varies with the degree of existing development.
Owners of undeveloped land generally oppose restrictions on their freedom to build on it.
Homeowners in the middle of nowhere frequently find it in their interest to let their neighbors have fairly free rein in developing their land. That's because higher population densities would raise their own property values by making it economically feasible to bring to their district such amenities as paved roads, sewer lines, and shopping.
As density increases, however, a turning point is typically reached. After a certain point, adding more housing density would hurt the property values of current homeowners. Then, homeowners often start to try to impose development restrictions on the owners of nearby empty land.
This logic suggests that support for environmentalist candidates like Al Gore would be greater in heavily developed suburbs than in rural areas.
Judging from the famous "Red vs. Blue" map of 2000 election results, that turned out to be true in November 2000. Although Al Gore won a narrow plurality of the popular vote, George W. Bush won counties covering about four-fifths of the land area in the lower 48 states. Bush, with his anti-environmentalist views, did much better in counties where the typical landowner would benefit from new developments. In contrast, the staunchly green Gore did best in already crowded regions. Gore's counties have about five times the population density of Bush's counties.
Exit polls showed the GOP candidate's vote development levels increased. Bush won 59 percent of vote in rural areas and small towns, but only 49 percent of the suburbs. In small cities, Bush took 40 percent of the vote, and in big cities just 26 percent.
For more, see http://www.isteve.com/Golf_Range_Rover_Republicans.htm
I should add that I have lived in three out of the five major cities on the East Coast
Me too, though by my count Boston, New York, Philadelphia, Washington, Atlanta and Miami makes six.
I'm not sure where these vast exurban tracts of farmland you're discussing are located, but I certainly haven't run into them anywhere within reasonable commuting distance of New York, DC, or Boston.
They're not in commuting range; it's a question of how the exurbs are going to develop. Take a look at Western Massachussetts or the Catskills. Towns like Great Barrington, North Adams and Pittsfield, or New Paltz in NY state, use zoning to create new urban centers for the post-industrial economy, while preserving farm and park land. They're prospering. Towns that haven't realized the value of zoning for density aren't.
You may not be familiar with the work of Ed Glaeser, which I referenced. Yes, there are dense town centers in older inner ring suburbs. But upzoning, which is what is needed, has practically halted since the legal revolution of the 1970s in which community groups realized they had the power to stop pretty much any changed in their neighborhood . . . except gentrification. The point I was making is not that nothing is zoned for density; it's that no one in built up East Cost areas, be they suburbs or urban, ever seems to change their zoning regulations in order to encourage density.
Perhaps I used "East Coast" too restrictively, but I was referring to the metropolitan areas, not any marvelous things which may or may not be happening in the Catskills. New Paltz, however, is really not a very good example of any general phenomenon, as I'm sure you know; it's a hippie enclave surrounding a state college whose politics bear no resemblance to pretty much anywhere else in New York State. The fact that they are upzoning, if they are, is interesting, but I wouldn't herald it as any sort of a trend, and indeed, would be surprised if the promised zoning-induced prosperity of the post-industrial economy materializes in any form other than parents and rock climbers who like visiting the town's many lovely cafes.
Having spent a couple of years in an inner-ring suburb of Boston where I paid some attention to development/zoning issues, I want to raise another factor that contributes to a fear of upzoning/upbuilding. Sure there was a bunch of NIMBY-ism, but there was also a pretty frequent refrain about providing utilities and infrastructure to an expanded population. It seems that it's a lot easier to build new roads and pipes than to expand or fix old ones, which makes intuitive sense. That constraint would limit increased density in cities, the longer that they have been built-up.
I can't avoid linking this to last week's fire in Adams Morgan, which was exacerbated by out-of-date water pipes. Hearing from municipal officials, it almost sounds like there was some magical time when there was plenty of money in the coffers roads, pipes, and the like. It sounds pretty implausible, but I don't have the knowledge about the history to say for sure. Anyone out in the tubes know?
Along much of the East Coast, zoning regulations do nothing of the sort.
Well, DC for one has a regulation that specifically prohibits building tall buildings. However, I'll limit myself to that since I don't have knowledge of other cities. However, Virginia Postrel's latest in this magazine is also relevant to the issue.
I know that Los Angeles also has zoning regulations that specifically protect some of the low density housing in the city core. Mrs. Postrel's article also claims that in large US cities, it is easiest to add additional density to areas that are already dense, whereas zoning restrictions prevent adding density (and density increases slowest) in places where density is currently low, even when in city centers. That suggests that it is not a problem of land availability alone.
Dallas and Houston are not perfectly walkable cities, no. But neither is any city that has grown up in the automobile (and zoning) age. Dallas and Houston are at least both right now marked by a trend of increasing density at the city center even as the suburbs spread out, which is more than most other cities can say.
The areas in the US that have the least sprawl have achieved it through zoning. The areas that have the worst sprawl have no zoning.
I must beg to differ. The areas that have the least sprawl achieved their density before zoning was so popular. The San Francisco Bay Area has terrible sprawl. Yes, there's a charming, expensive city center, and that's great. But there's a distinct lack of high-rises as a result of zoning, and hence there's a lot of sprawl in the area. Los Angeles is similar, though there's a bit more high density housing, but the remaining pockets of low density housing are highly protected through sprawl. The DC area sprawl is also protected by zoning, both in the suburbs and in the "no high rise" law in the city itself.
I think that you, and other commentators, are confused about cause and effect. Yes, city centers do have higher density than their suburbs, and the further out in the suburbs you go, both density and zoning decreases. However, considering that the vast majority of central city (and indeed most) zoning prevents construction and density increases, your explanation is not satisfactory to me. Here is mine.
As density increases, the pressure from homeowners to protect their property values increases and restrictive zoning increases. Eventually, it becomes very expensive to build more and increase density in an area. Builders are then forced to go out into an area of lower density, which does not yet have restrictive zoning laws, in order to build.
That developers build more in the suburbs when the suburbs have less zoning, and hence create more sprawl, does not prove that less zoning creates sprawl. Rather, it proves that having more zoning in the city center and less outside produces sprawl. Megan and Matt's point still holds: with less zoning in city centers, there would be less sprawl. And surely for the case of sprawl in the US as a whole (and especially the environmental impact) that's a lot more significant than whether some far out small town has a quaint downtown or a shopping center with a Wal-Mart.
Now, you are correct that in some places, the great desire of homeowners to increase their property values can be harness in anti-sprawl ways through innovative zoning. Portland is one such example, as I understand it.
It can't be earthquake risk, since I think both cities are subject to that. Is San Diego just more Republican and more pro-growth?
According to Virginia Postrel's article and the research she mentions, it is considerably easier to build in San Diego than San Francisco.
But eliminating all zoning would lead to high-rise development in much of Georgetown. Do you see that this would be bad for the city?
On balance, I don't think that she does. Megan favors higher density cities for a lot of reasons. That requires high-rises. Surely there are costs, but the benefits in her opinion (and mine) outweigh the costs. This is especially since the benefits tend to accrue to those poorer (who wish to afford housing) and the costs fall somewhat more heavily on the richer (those who own such nice brownstones and others). If groups believe that particular historic buildings are worth preserving, then there are methods of doing so. Having charitable organizations own the buildings and refuse to sell, for example.
Note that I also believe that the use of eminent domain should be restricted more. It is difficult to eliminate zoning entirely in an area where eminent domain may be used easily, though one hopes that voters would at least place a check on the use of eminent domain against historic sites. However, at the same time I note that both zoning and eminent domain tend to be used to benefit the already upper middle class and rich (including the owners of brownstones).
I'd be instantly out of my depth trying to make intellegent remarks on urban zoning and city planning. There is a point not yet mentioned that seems salient, however.
Most of us have a huge stake in the future sales-value of our homes. From my limited perspective, zoning laws and deed restrictions seem to be defensive maneuvers to protect (and hopefully to grow) equity. The idea of living in a sub-division in which one gives up the choice of color-of-paint and species-of-grass-in-lawn and occaisions-when-the-garage-door-can-be-open seems damn near unAmerican to me. But those neighborhoods are very successful financially.
I don't know how this impacts on high-rises in SanDiego exactly. But I bet that the owners association of that high rise does know exactly.
As always seems to be the case, theory overlooks some inconvenient facts.
First, assuming the truth of the proposition that homeowners support zoning as a way of protecting their investment in their homes, why is that a bad thing? When people buy a residence, they are buying a neighborhood, not just a building. They make their decision based on the neighborhood as it is. Is it not rational for them to be interested in preserving the neighborhood as it is, so that future buyers will make the same calculus that they did?
Secondly, one of the nasty characteristics about the development business is that it is a "take the money and run" business. Let's take a current controversy in the city in which, apparently, both of us live -- Washington, DC. There is an ongoing argument about more intensely developing the Wisconsin Avenue corridor in the vicinity of Tenleytown and west to Friendship Heights. It's a major thoroughfare; there's a metro line, etc. It should be attractive for more intense development, right? Except that the metro line and the street are already running at, or over, capacity. So, where are the new residents going to fit in? Problem is, the developers will sell the neighborhood as it is, and only later will their customers experience what it has become and realize that they overpaid. That's what I mean by "take the money and run."
Third, when I lived and worked in Houston in the mid-1970s, one of the consequences of no zoning was the evident destruction of old residential neighborhoods that were gradually degraded by low-quality commercial development: Taco Bell shops, gas stations, etc. Significantly, the most valuable close-in neighborhood in Houston -- "River Oaks" -- was entirely residential and was protected by deed covenants, a form of private zoning. Likewise, the small, politically separate city of West University -- which did have zoning -- commanded a tremendous price premium for its modest-scale housing stock -- because it was both close to the Houston city center and because residential neighborhoods were protected by zoning. At the time, Houston had a big freeway system that served a lot of open space. When I moved down there in 1973, the traffic difference between DC and Houston was very substantial. There was no congestion, ever, by DC standards. However, by the 1980s, when that space filled up with low-density housing, driven by the oil boom of the late 1970s, Houston freeways were highly congested. An initiative to form a regional transit authority that was rejected in 1974, was re-initiated successfully in the 1980s. Unfortunately, by that time, acquiring rights-of-way for any kind of non road-based transit was prohibitively expensive. So "mass transit" means buses that are stuck in the same traffic congestion as private cars.
Which leads to my final point: while personal cars are efficient in terms of getting each person to and from his chosen origin and destination, they depend upon a massive road network. Once the area the road network serves is occupied at even a moderate density, that area will generate more traffic than the road can handle or be expanded to handle. A good example in our area (DC) is Interstate 95 south of the Potomac River. I have lived here since 1960 (with the exception of 1973-1975), and in those 47 years, I-95 has continuously been under construction. It is simply not possible to build that road fast enough to keep ahead of the demand for its use.
Land use planning has the potential for rationalizing the process of developing transportation infrastructure, whether that infrastructure is roads or rails used by mass transit systems.
So, no matter how attractive Dr. Friedman's theory may be, in practice, it does not seem to produce results that are any better than regulation. And the problem with regulation -- that I am sure offended Dr. Friedman -- is that it is a politically-driven rather than an economically-driven process. Within his frame of reference that is "irrational." Irrational though it may be, it has, I think more potential for producing a net positive result than the "invisible hand."
You miss an essential feature of land use regulations. Your comments are only relevant to residential land use. A very basic purpose of zoning separates industrial from residential from commercial development (or provides the conditions for its integration).
Why should your owning a one-story house give you a permanent veto on any more efficient use of the land surrounding it, which you yourself do not own?
I think his point is not that his "why" trumps the other guy's "why," but that there are arguments for both sides of the dispute, and that both arguments appeal to the logic of econ 101.
The current way to resolve that debate is through zoning. Megan and you may want zoning to just disappear, but the debate would remain because, hey, you can't just impose your will on the organism of without consequences.
Ahhhh but, the zoning I see in the DC-suburbs is simply developers having their way. Contrary to the assertion that much east-coast zoning has preserved open-space, I see just the opposite. When zoning stands in the way of a housing development which offers zero in the way of community-like amenities (e.g. a school, a grocery store, or anything else within walking distance, for that matter), said developer simply begins a year-long campaign through contributions to a couple of favorite county politicians and suddenly the zoning is changed in favor of the developer. I know there have been some exceptions, but that's just the point: they are exceptions.
Zoning has ill-served cities by emptying them into mind-stultifying suburbs with nothing to offer other than chemically produced grass and poor architecture. Zoning largely serves the powerful monied interests.
Now, if all cities could be like Portland, Oregon you might convince me it could work, but I'm not seeing it around NYC or DC which I must travel through weekly. Soon, we may have an Atlantic City style casino on the edge of the Catskills, for God's sake.
When I was a city planning commissioner, I noticed a common pattern. When a land-use plan is first created, property values adjust accordingly. Short-term profit-maximizing developers found that acquiring land planned for Industrial use and applying for rezoning to develop as Residential was easier/cheaper than acquiring land planned for residential. Residential development was easier than commercial/industrial development, as residential did not require a "partnership" with other companies, and could proceed piecemeal. Most of the cases which came before the commission were requests for rezoning or zoning variances, or relief from conditions agreed to at a prior rezoning. One of the more egregious consequences of this was an industrial company which was refused the right to expand on its own property because of the perceived impact on the neighboring residential area, which was developed on rezoned land after the factory was already in business.
Now, it is easy to say that this is an example of a zoning regimen which is not working as it should; I agree. Trying to stick to a zoning plan when the money/politics is on the other side is not a practical course of action. My attempts to "follow the rules" or, at least, make it obvious that we were not following the rules, simply meant my tenure on the planning commission was limited. I did get a very nice plaque, though.
My conclusion? That all grand schemes for controlling/managing development, like all schemes for anything, fail when confronted with normal human behavior. All you can do is affect who the winners are. Usually in unanticipated ways.
A major use of zoning in the suburbs is to keep out poorer people whose children will wreck the local public schools.
That's also why suburban Republican homeowner parents in New Jersey voted against pro-voucher Republican Brent Schundler in the governor's race a few years ago. They paid a lot of money for a house in a school district with high quality students and they don't want low quality students being able to transfer in with vouchers.
A very basic purpose of zoning separates industrial from residential from commercial development (or provides the conditions for its integration).
Yes, which in general has meant suburbs with nothing within walking distance. But the very basic purpose of zoning that I've ever seen has been to preserve the property values of the people already there (generally wealthier than those wanting to move there), with some slight adjustments made for the truly wealthy who can grease the right palms. I can hardly see how the lack of zoning would be worse.
A major use of zoning in the suburbs is to keep out poorer people whose children will wreck the local public schools.
Steve Sailer's points here seem quite on to me as to the description of the situation, regardless of whether one approves of the practice.
Is it not rational for them to be interested in preserving the neighborhood as it is, so that future buyers will make the same calculus that they did?
...
Secondly, one of the nasty characteristics about the development business is that it is a "take the money and run" business.
...
So, no matter how attractive Dr. Friedman's theory may be, in practice, it does not seem to produce results that are any better than regulation. And the problem with regulation -- that I am sure offended Dr. Friedman -- is that it is a politically-driven rather than an economically-driven process
Bruce Beckner:
You make a rather large leap to me from "it's hard to see how lack of zoning would be better" to "zoning can be better." It seems to me that you're pointing out that the actual market is not ideal as some theory my predict-- but then saying that your ideal theoretical zoning could be better than the real-world market. In practice neither is ideal.
I think you are wrong about what offended Dr. Friedman and others. The problem with zoning is that it's inherently more inefficient and corrupt even when achieving the same results. In the market, the development companies end up having to pay the current homeowners to sell out, but with zoning (or, equivalently, eminent domain) they end up paying the politicians instead.
To me, the problem I have with you invoking future buyers is that the zoning problem makes housing much more expensive for future buyers. To your complaints about "take the money and run" I would reply that it's better than a system that favors those who already have against the have-not who want to purchase their first home. Consider Virginia Postrel's article-- even if you think that Houston and DC have similar traffic and other problems, what is worth the $500k or more extra that it costs to get a single family home near DC than near Houston?
It seems to me that restrictive zoning benefits the rich at the expensive of the middle class and lower class, and it definitely affects perceptions of how the middle class is doing and what income is necessary to have the American dream.
I like the way Houston does it. I live in a neighborhood with deed restrictions. We have a neighborhood association and rules that limit use of one's home as a junkyard or brothel or whatever. We also have rules about keeping your property looking reasonably nice. When you buy your house, you are given a set of rules and you can choose to buy or not after reading the.
I prefer this to zoning controlled by the government where a wealthy developer can swoop in, lobby heavily, and change the rules out from under the homeowners. In our case, WE control the rules.
We still have wealthy and poor neighborhoods, suburbs, and the like. Houston is also very spread out which may have negative externalities but I think contributes to the relatively peaceful nature of the city. We have very low racial tension in general for having such a high number of minorities. I think that when you pack people too densely, it causes more social problems.
EI
I also live in Houston, and it is important to add that while the neighborhoods with zoning (River Oaks, West U., Woodland Heights, etc.) do command a premium over equally nice un-zoned ones...you don't HAVE to live in these neighborhoods. In cities with extensive zoning, you either pay the ridiculous premium for too-large urban lots, or you move to the suburbs. Here, where any "normal" lot can become three townhouses, youngish people can actually own a house in a nice neighborhood near downtown. I can see hundreds of these townhouses from my office window, and dozens more under construction. Median price for 2-2.5K square feet is probably $300K or so. And the area where most of these are going in--west of downtown--is pretty walkable if you ask me. The other day I counted 25 "help wanted" signs (tightness of the labor market is another issue entirely) with three-quarters of a mile of my house, and that was only about half of the total number of retail establishments.
Anyway, point being, neighborhood-level restrictions (which are actually, you know, voluntary) seem to be a pretty good solution to the problem of too little urban development. But there is a seriously enfranchised class of current homeowners ready to mobilize and block such a sensible plan...