Did Houston's Lack Of Zoning Shield It From The Housing Meltdown?

A recent report by a Federal Reserve Bank senior economist argues that Houston's resiliency during the ongoing housing crisis is due in part to its lack of zoning regulations.

1 minute read

May 29, 2008, 6:00 AM PDT

By Christian Madera @http://www.twitter.com/cpmadera


"Houston has remained on the sidelines of the latest national financial crisis. Our housing prices haven't plunged, just as they didn't soar as the national housing bubble inflated. Our prices remained modest, if you believe the conventional wisdom, because we have a secret ingredient: plenty of land.

An abundance of open space by itself, though, may not be what protected us. Texas, after all, experienced an ugly real estate implosion in the late 1980s.

In a report issued by the Federal Reserve Bank of Dallas' Houston branch, senior economist Bill Gilmer found another reason Houston has been shielded from the country's real estate crisis: the lack of zoning.

Gilmer's findings are worth considering as the zoning debate rages anew.

From an economic perspective, zoning laws work as a constriction of supply, which played a role in rising housing prices in other parts of the country."

"In Houston, however, demand was met with new construction rather than rising prices. As a result, when the real estate bubble burst, the effects on Houston were less severe than elsewhere.

As of January, about 4 percent of Texas homes backed by subprime loans were in foreclosure, according to the Fed. That compares with 11.5 percent for California and 14.4 percent for Florida."

Tuesday, May 27, 2008 in The Houston Chronicle

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