This video is part of our Kite & Key Shorts series — easy to understand ... but hard to forget.
Real estate prices got you down?
Part of the problem might be your local government.
While there can be many reasons for high housing costs, many cities have expensive housing in part because of their zoning rules.i
Local homeowners often push for zoning that prevents new housing from being built in their neighborhoods.
When they get their way, there aren’t enough houses for the people who want to buy them. And prices go up as a result.ii
Some economists call this the “zoning tax.”iii
Where is the zoning tax the worst?
In New York City, it increases costs for a typical home by about $150,000 per quarter acre.iv
In Seattle, it’s about $175,000.v
Homeowners in Los Angeles pay an extra $200,000.vi
In San Francisco, the zoning tax adds over $400,000 per quarter acre.vii
Not willing to sell a kidney to buy a house? We’ve got good news for you.
Plenty of cities stay affordable by permitting much more new housing to be built.
In Charlotte, the zoning tax is only about $7,500 per quarter acre.viii
In Minneapolis, it’s less than $4,500.ix
And in Dallas it’s under $2,200.x
So, the next time a Zillow listing makes your jaw drop, remember that it may be the zoning tax at work.
WHAT YOU NEED TO KNOW:
- When zoning prevents new homes from being built, it drives housing prices up.
- San Francisco has the highest zoning tax, which adds over $400,000 per quarter acre.
- Dallas’ zoning tax adds less than $2,200 per quarter acre.
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