 If you checked housing prices lately, I checked six, seven times a day. And houses are stupid expensive. At first, I assumed houses cost so much because they have buried treasure in the backyard. But the sentencing judge at my trespassing trial said most houses don't have treasure at all. Fortunately, jail provided me ample time to learn about economics and the meaning of friendship. Eatin'? Yeah. You've been sold for a pack of cigarettes. Yep. That's how currency works. If you're in prison, there are markets and scarce goods. Eatin'? Yeah. You've been sold for half a pack of cigarettes. Housing prices are a function of supply and demand. When we reduce the available stock of housing, because of supply and demand, the price of housing increases. So essentially, build more houses, houses will be cheaper, restrict how many houses are available, housing becomes more expensive. The number one culprit of driving up house prices? Land use regulations. Zoning laws establish where people can build and can't build homes and what types of homes they can build. Kind of like SimCity. There's a commercial section over here, an industrial section over there, Hooverville, that away, some light residential zoning, red light districts here, here, here, secret labor camp. Oh, we work. And so forth. It's a fun system if you enjoy playing SimCity. But in real life, it artificially limits the available space for building houses. We only have so much land. Maybe someday we'll get around to conquering a lazier, defenseless planet. But until then, cities, which are where most people live, have a limited amount of space in which to build. If zoning laws only allow builders to construct 10 new houses, all homes will cost more than if the city allowed builders to construct 1,000 houses. In 2022, 15% of New York City's commercial properties were vacant. Lot of employees have gone remote, lessening the need for office space. Some buildings are just old and unappealing to prospective businesses, which are like hermit crabs with neckties. There is demand for housing in New York City, quite a lot in fact. A building with a lot of vacant offices might be inclined to mix and match, converting vacant floors into apartments. But they can't legally do that. Even if the whole building is vacant, everybody's working from home in their pajamas. Nobody's wearing pants. The owners can't convert it to housing, even if nobody wants to work in the building. And thousands of prospective tenants would love nothing more than a one-bedroom overlooking the famous Green Lady holding an ice cream cone. They still could not legally demolish the old office complex and build housing. Or maybe a developer wants to tear down an old building design for one or two families to build a sky rise that accommodates hundreds. Even if it's already zoned for residential use, the building can't be altered if it's designated as historic. Picture New York City in your mind. Now think of all the wonderful old buildings that would be a cultural loss if demolished. How many do you suppose there are? 500? A thousand? If I were designating historical buildings, I'd use much less expansive criteria, such as, would my mom be excited to eat brunch inside of this thing? How potentially vengeful are the spirits of this graveyard? Or did George Washington's sleep, mate, or fight here? Historical designations are often just weaponized zoning to help increase property value for nimbies. We... Nope. Try again. That's not how you spell that. Close enough. Right. Anyway, these laws are used by nimbies to drive up property value. Or keep nice views. In Los Angeles, denizens worried that a new apartment building would block their view of a clock. So they advocated for designating everything in between as a historic district. A significant amount of zoning laws in the United States are restrictions homeowners put in place on other people's property to ensure that their own property maintains or increases value. Great if you're the homeowner, but sucks if you want to build a home. Remember New York? The skyline we all know and love has been grandfathered into the city code. Today, 40% of the buildings in New York couldn't be built because they're too tall or have too many apartments or have too many businesses in them. To be clear, I think it makes sense to have a little zoning. If you wanted to make regulations saying no playgrounds next to a wolf pocket, fair enough. Cities need regulations to deal with negative externalities like harmful chemicals, noise from clangy factory things, or smells from smelly clangy factory things. Basically loud things, smelly things, and dangerous things. But most American cities go a step further. Rather than pushing smog or wolf parks out of heavily populated areas, American cities legally forbid heavily populated areas to exist at all because American cities zone away density. Homeowners want their property to be as valuable as possible. So relying on supply and demand, they artificially restrict supply through minimum lot sizes. I think tiny houses are cute, for example. In that cute, it's about 250 square feet. If you bought half an acre of land, you could build 87 tiny houses like that on it. But other homeowners in the neighborhood would worry that a tiny house village would hurt property value. Build a bunch of tiny houses, want a bunch of hobbits move into the neighborhood? They don't want them attracting dragons. So the Nimbies talk to the city and get a minimum lot size established. Now it's illegal for me to build more than one home on the lot. The neighborhood keeps its big leafy yards and the single house I can legally build is probably going to be a lot larger than the proposed tiny home which will keep property value high. That hobbit example might seem silly, but something similar happened with cities all across America throughout the 20th century. Tomowners didn't want black people to move into their neighborhood, so they zoned massive parts of town for single-family dwelling units to ensure no apartment buildings could sprout up. While America is less racist and arguably more pro-hubbit than it was a century ago, those zoning restrictions persist. It's illegal to build anything other than a single-family home in 75 percent, 75 percent of the residential land in many American cities. Not duplexes, triplexes, or God forbid apartment buildings. Not buildings which could house lots of families, thereby increasing supply and bringing down prices. You can only build houses. Check out this map I stole. You may think this is weirdly sexual in nature, but it's actually Minneapolis, Minnesota. So we're both right. All the pink gunky bits are places you can't legally build anything other than a single-family home, meaning you can't erect apartment complexes. We are legally abolishing density, therefore artificially creating scarcity, which drives up housing prices. Or here, take a look at this one. This may look like a rugby injury, but it's actually Seattle, those pink spots. That's where multi-family housing is illegal. You can only build houses there. Or how about this? Eighty-five percent of Sandy Springs, Georgia. Is this Sandy Springs, Georgia, or Sandra Springs from Georgia, my ex-girlfriend? It's Sandra. Can I? Excuse me a second. Hey, Sandra, it's heating. Triplets, huh? What do you want to ... I don't know. I just found out about this. I'll tell you what we won't do. You want to know what we won't do? Within a multi-family dwelling unit in Arlington, Texas? Because, Sandra, Texans don't really believe in property rights, they believe in zoning other people. Sandra, hold on. You've got to say your thing. I get to say, because my things are important too. I have a very important job. I do important things. I'm changing the world. Finally, cities are stacking regulations and codes onto new construction. Environmental impact fees, tree removal fees, ensuring rain gutters are a particular length, and so forth. These may be worthwhile environmental policies, but by tacking the Manda new construction, we also drive up construction costs. They're not free. A study from the housing research firm Zellman & Associates calculated that local impact fees have climbed 45% since 2005 to an average of $21,000 per home across 37 major markets. By putting their burden primarily on new construction, we shift societies' costs away from everyone and on to people trying to build new homes, which, not surprisingly, makes those homes more expensive. Now, at this point, you might say, Heaton, that's all well and good, trying to make houses cost less by increasing their supply. Terrific. Great. Go do that. But shouldn't the government also be building affordable housing? That is a worthwhile conversation to have. You can make a good argument that cities should build X amount of housing for the country, which is more humane and cheaper than relying on hospitals, police, and jails. But ultimately, even if your solution to the housing crisis is some version of government building projects, it won't matter until we defang rampant overzoning. The biggest thing we could do as a nation, right now, to lower the cost of housing is just to sweep away all the needless land use laws that are specifically designed to increase the value of housing. From lot sizes, single-family use occupancy, overzoning, and weaponized permitting schemes. Whatever government steps you think are a good idea, it all has to begin with land use reform. I, for one, am not afraid of more neighbors. I like neighbors. I want more neighbors. What I don't want are more nimbies. Sure. Yeah.