The Hermès Handbag of Housing: How Single-Family Zoning is Rigging the Market
Sone things that seem way more expensive than they should be. We all know the usual suspects – designer clothes, limited-edition sneakers, and the infamous Hermès Birkin bag. These items command crazy prices because of, well, scarcity. But what if I told you that same principle was driving up the cost of something much more fundamental – our homes?
Today, let's talk about single-family zoning, the seemingly innocent planning tool that’s turned into a massive hurdle for affordability and equality.
Scarcity, as Scott Galloway brilliantly outlines, is the key to irrational prices. From Prada bags to Supreme, manufactured scarcity elevates mundane objects into luxury goods, commanding exorbitant prices. This principle, however, isn't limited to consumer goods; it’s actively at play in one of the most fundamental aspects of our lives: housing. Specifically, single-family zoning acts as a centrally planned mechanism for scarcity, driving up prices and perpetuating a form of artificial luxury in the real estate market.
The Birkin Bag of Suburbs
Think of it this way: Hermès could totally make way more Birkin bags, but they don’t. Why? Because limiting supply creates demand, exclusivity, and sky-high prices. Single-family zoning is doing basically the same thing with housing. It’s like saying, "Nope, only detached houses allowed here," across entire swaths of land. No apartments, no townhouses, no granny flats – just single-family homes on individual lots.
Single-family zoning, the practice of designating large swathes of residential land for only detached, single-family homes, is the equivalent of a carefully controlled production quota for a Prada factory. Just as Prada chooses to produce a limited number of Prada bags, many cities and towns choose to limit the construction of anything other than single-family homes, effectively restricting the available supply of housing. This isn’t a natural limitation; it’s a political and legal construct, a policy decision that creates and sustains artificial scarcity.
Why does this matter? Because scarcity drives prices. By restricting the type and density of housing that can be built, especially in desirable locations, single-family zoning dramatically elevates the cost of housing. Like the limited supply of Birkin bags creating a frenzy of desire, the artificial limit on new housing makes existing homes more valuable – and less affordable to most. This isn’t organic market forces at play; it's a deliberate manipulation of supply.
And just like that, the available supply of housing gets choked off. This isn't about natural market forces; it's about deliberate choices made by local governments, consciously limiting housing options. It's like creating an artificial shortage on purpose. The result? Prices go through the roof.
It's the real estate version of a carefully controlled product drop, making existing homes more valuable because of limited supply. Suddenly, owning a home, especially in a desirable area, becomes less about a place to live and more about status. It's the housing equivalent of that Birkin bag – a signal of success, guarded by high prices.
Single-family zoning isn't just about limiting the supply of housing. It also creates an illusion of exclusivity. The detached home, often on a larger lot, becomes a symbol of success and status – the suburban equivalent of the Hermès scarf. It's a purchase less about providing shelter and more about signaling social standing. Like the luxury brand, these areas are frequently guarded with restrictive covenants, designed to prevent not only other types of development, but "undesirable" residents from moving in and potentially tarnishing the exclusivity of the neighborhood. It's the housing equivalent of a VIP lounge – access is carefully curated, and many are left on the outside looking in.
The Central Planning Paradox
Here's the twist – single-family zoning is essentially central planning. Governments are dictating what kind of housing can be built where, instead of letting the market respond naturally to what people actually need and want. We'd never accept the government deciding what kind of car we could buy, but somehow, we've normalized letting them decide what kind of housing we can live in.
The irony of single-family zoning is that it's a form of central planning masquerading as a free market. While we might recoil at the idea of the government dictating the kind of clothes we buy, we often accept the government dictating the kind of housing we can live in. Instead of allowing market forces to determine the variety and density of housing, zoning laws create artificial restrictions, favoring one specific type of housing, leading to artificially high prices and inequitable access. It creates a system where homes function less as the critical need for shelter and more as an investment asset, further driving up prices and preventing housing from being treated like a fundamental right.
Think about it: if there's a demand for townhouses and apartments, why should regulations prevent them from being built? It makes as much sense as telling an artist they're only allowed to create paintings with three colors. By limiting the type and density of housing, we’re not just shaping our communities; we’re also driving up prices, making it harder for most people to afford housing.
Who Benefits from this Rigged System?
The big winners here are folks who already own property in areas zoned exclusively for single-family homes. The artificial scarcity created by these rules sends their home values skyward, while everyone else struggles to find affordable options. It's like getting early access to a limited edition sneaker drop, then reselling them for triple the price. You gain, but others are left behind.
And who’s getting left behind? Well, renters, first-time homebuyers, and often, younger generations who haven’t accumulated a huge amount of wealth. The communities become an “exclusive club” whose members benefit from restrictions that make it incredibly difficult for newcomers to join. Single-family zoning creates a system where wealth is reinforced, limiting opportunities for those who don't already have it.
As Scott Galloway describes how luxury firms can “cap the same way you do an oil well — and turn on/off as needed” it’s not hard to see how the scarcity produced by single-family zoning does just that. In communities with limited housing opportunities, the simple decision of not approving new development directly impacts the price of existing homes. This policy lets those in control of land-use decisions essentially control when more money becomes available for those who have bought into the housing market and, in particular, those who already owned before the policy was put in place
The Shackles on the Pursuit of Happiness
This isn’t just about money, though. This is about the fundamental idea of “life, liberty, and the pursuit of happiness.” When you’re saddled with crippling rent or stuck in a long commute because you can’t afford to live closer to work, your ability to pursue your goals, spend time with your family, and, let’s be honest, just enjoy your life gets seriously hampered. Single-family zoning, by restricting housing options and driving up costs, actively shackles the pursuit of happiness for renters and many families. It becomes a game of musical chairs where there are never enough spots for all, and those without a seat are left out in the cold.
It also perpetuates a cycle of inequality. By limiting diverse housing options, we often end up with segregated communities, where socioeconomic status, and even race, often dictates where you live and the opportunities you have. It also forces sprawl, with long commutes, which has a terrible impact on the environment.
Unlocking a Better Future
So, what can we do? Well, it's time to start questioning the dominance of single-family zoning. We need to allow more diverse housing options – townhouses, apartments, ADUs, you name it. This isn’t about tearing down the suburbs; it's about creating more inclusive and vibrant communities that allow everyone a place to thrive. We can allow more of a mix of housing types and not just single family homes, and that will make cities more accessible and more affordable.
We can reform our zoning policies, and start thinking about housing as a fundamental need, not an investment vehicle. Think of it like this: the more housing we build, the more seats at the table are available for everyone. More seats means less competition for them, and that will make it less expensive for everyone.
This isn't just a housing issue; it's an issue of fairness, opportunity, and our shared future. It’s time to recognize single-family zoning for what it is: a system that manufactures scarcity to the detriment of young Americans and renters. It's time to unlock that potential by allowing more housing to be built.
What are your thoughts?