Contrary to What You’ve Heard, There Actually is Land Use Regulation in Houston

On Sept. 16, Zillow’s Housing Roadmap to 2016 tour stops in Houston, one of America’s fastest-growing cities and also — mostly — one of its most affordable. But despite its successes, Houston is not immune to the many challenges facing other rapidly growing American cities, including rising income inequality, emerging rental affordability concerns and ongoing efforts to diversify its economic base.
In advance of our visit, Zillow Research will be publishing a series of Houston-focused research briefs aimed at shedding light on some of the unique trends we’re observing in the area. All of our Houston research can be found here, and we encourage you to please join us on Sept. 16 if you can. If you can’t, please join in the conversation on social media with the hashtag #HousinginAmerica.
A city’s housing supply needs to evolve over time to fit the needs of a changing population. For example, Detroit has entirely too much housing for its current population, while growing tech hubs like Seattle, San Francisco and Denver don’t have near enough affordable housing to meet the demand from of tens of thousands of new residents.
Still, in most cities, changing the housing supply is heavily dependent on – and, some might say, encumbered by – local housing regulations, zoning and the development process. And in a world in which the smallest changes are often highly regulated, many look to the city of Houston as an example of laissez-faire housing regulation at its best. Unconstrained by zoning, the story goes, the housing market in Houston is more able to change with the immediate needs of its population.
But Houston may not be the shining example of market forces set free that conventional wisdom may suggest.
Over the past several decades, dozens of hyper-local, de facto zoning regulations – even if not officially codified into a zoning ordinance – have undoubtedly helped shape the Houston housing landscape. An examination of how those regulations evolved in Houston, and how they’re enforced today, can offer a number of lessons for other American cities struggling with how best to manage housing supply.
It’s true that to this day, the city of Houston has no official zoning ordinance. But by no means does that imply that Houston’s land use is entirely unregulated. It isn’t. Nor does that mean that defined areas within the city with different degrees of restrictions do not exist. They do.
Houston land use regulation is characterized by citywide restraints on density, coupled with the decentralized creation of regulated pockets of homeowners collectively pursuing other methods to protect the value and character of their neighborhoods in a city without a formal zoning ordinance.
In 1963, the first residential guidelines were put in place in Houston. Beginning in 1965, Houston was granted legal authority to enact land-use policies, and over the past several decades those policies have evolved in several critical ways, with many important effects:[1]
1963: Houston is given legal authority to enforce the City Planning Commission’s regulations covering all new residential developments. Regulations govern housing quality and density standards through restraints on height, mandated minimum lot sizes and minimum floor-area ratios. A 25-foot set-back requirement is put in place, and the minimum residential lot size is set at 7,000 square feet if a septic system is needed and 5,000 square feet if not. These regulations are codified in Houston’s development ordinance, whereas in other cities these requirements would fall under the local zoning ordinance. These enforcable, city-wide lot size and set-back requirements help to ensure that Houston’s housing character is overwhelmingly tilted toward single-family properties with large front yards.
1965: Texas law grants cities the power to enforce private residential restrictions, known as deed restrictions. Before this law, these deed restrictions, or private restrictive covenants, were essentially a free-market definition of property rights via a contractual agreement among propety owners, and enforced through private lawsuit. The passage of this law removed homeowners’ costs from pursuing violations through lawsuits. Instead, the city uses its own resources to uphold restrictions on general site use, set-back requirements, lot size, structure size and the number of structures. A city also has the power to deny building permits based on compliance with private deed restrictions.
In other words, the private nature of these agreements is removed by the government’s involvement in their enforcement, a role fairly indistinguishable from enforcing zoning law. The major difference is the grassroots, decentralized origin of the restrictions themselves – developers, a group of homeowners within a given neighborhood or even the landowner of a single lot can (and do) make enforceable restrictions.
Among the net results of this unique regulatory framework is that deed restrictions are found more often in more affluent neighborhoods or newer developments. The variety and uncertainty of regulatory disparity within restricted areas encourages commercial development in unrestricted, often poorer, neighborhoods.
1982: Houston’s City Planning Commission is authorized to review and regulate apartment and commercial developments uniformly across the city and within surrounding areas. Standards imposed include off-street parking, open space and setback requirements. Deed restrictions supercede the Development Ordinance.
1998: The city’s development ordinance divides the city into urban and suburban areas, and defines separate land use regulations for each classification. Set-back requirements in urban areas, for example, are eased to allow for greater walkability. Existing deed restrictions, however, still supercede the development ordinance. While still not zoned into several classes as in many major cities, the separation of land into urban and suburban categories marked another step towards zoning in truth in Houston.
2001: A prevailing-lot-size provision added to the city’s development ordinance allows for a majority (51 percent) of owners within a given area to establish a prevailing lot size outside of a deed restricted-area which is similarly enforced by the city. In effect, this prevents developers from splitting lots in order to create two or more homes on existing single-family parcels.
2003: City enforcement of private deed restrictions is extended to cover landscaping, garbage disposal, noise levels, character of use and architecture, type of activity, construction of fences and the type of required maintenance. The requirement for a unanimous approval of local landowners to form deed restrictions is relaxed to a petition of a majority of parcel owners or the owners of a majority of the square footage within the neighborhood. This enables a majority of landowners to more easily impose their will on other residents.
The net result of all this history is that it may be more difficult than many currently believe it is to continue developing in a meaningful way in Houston to combat growing affordability concerns.
Houston is among the fastest growing metropolitan areas in the U.S., and suffers from rental affordability problems like a majority of large U.S. cities. Stagnant incomes play a role, but rising rental demand in the face of a slowly growing rental housing stock is a main driver. Easing land use restrictions is one widely proposed method to allow the rental housing stock to grow more quickly.
But even in the most agreeable cities, getting a large number of neighborhood groups with disparate opinions and varying levels of investment in their communities on the same page can be a political nightmare.
[1] Additional constraints implemented since 2000 and not listed in the main text include: Defined right-of-way areas for different street types, to allow for future road widening; and proximity restrictions for junkyards, sexually oriented businesses, correctional facilities, hotels, hazardous materials businesses and manufactured/mobile housing.