The use of real estate zoning has been a heated debate from its existence. On one hand, proponents of it say you need it to protect integrity of real estate districts-do you want a nuclear power plant next to an elementary school, a brothel next to a church? On the other hand, opponents say, among other things, let the invisible hand of economics do its job and the highest and best use of the property will be determined-if housing is in shortage, should only single-family dwellings be allowed or should a developer be allowed to build an apartment building to fill the demand? So, does zoning help or hurt real estate values? I’m under the belief, and maybe I am biased because I live on Nantucket, that if utilized properly, zoning increases property values. There is a fine line how restrictive zoning should be. It should be just restrictive enough to protect the integrity of districts. This protection creates demand and a strong market because owners, buyers and sellers expectations are clear. Would someone want to live in or buy a home where they did not know what could go on around them? For a certain price, yes, but not as high of a price if the people knew a chemical plant couldn’t be built next to them. Zoning should not be too restrictive. For instance in a commercial district, zoning should not dictate that only an ice cream shop could be in a certain space-that would tremendously distort supply and demand economics. What happens if the existing ice cream shop goes bust and there isn’t another one to take its space, but there are five jewelers to take the space. That restriction creates a huge inefficiency in the economy. The debate will continue, but I’ll take Nantucket’s 300% appreciation over the last 20 years to Houston’s, which has no zoning, 95% appreciation over the last 20 years any day of the week. I know, not fair of me to compare Houston to Nantucket…
To zone or to not to zone…
