Rent control. Affordable carveouts. 50-year mortgages. All of these efforts do little aside from giving the public relation team a reason to put out a press release. Are we trying everything except the one solution that would solve the housing crisis? 

Zoning. 

Housing is expensive because it’s illegal to build enough of it where people want to live. Not because of materials, greed, interest rates, or “luxury developers.” Consider places like Los Angeles or San Jose or any major city where the zoning calls for single family homes. (In LA, that’s 75% of the city, in San Jose it’s around 94%.) 

Zoning restrictions make housing more expensive — it can add 25% to a project with height restrictions. Consider a plot of land with zoning restrictions on height.

If a parcel costs $4 million and zoning only allows 10 units, then each home has to absorb $400,000 of land cost before a single wall is built. If that same parcel is allowed to hold 40 units, each home only carries $100,000 of land cost. Nothing about the land changed, only the zoning rules did.

That $300,000 difference per unit isn’t money paid directly to the government, but it is a cost created by regulation. Zoning artificially limits how many households can share scarce urban land, forcing fewer homes to carry the full price. Developers don’t “eat” that cost. It shows up in higher rents or sale prices. In other words, restrictive zoning turns land scarcity into a permanent, baked-in housing tax.

Parking mandates can add even more costs. Permitting delays cause financing costs to balloon, and can make it hard for a developer to justify a small project if it takes too long to execute. Is it any wonder that developers prioritize luxury developments, where margins are much higher? Or that it’s harder and harder to build a starter home? 

Zoning doesn’t just throttle new construction. It actively outlaws constructing the buildings that housed millions of working- and middle-class urban residents at one time. Co-living, single-room occupancies (SROs), boarding houses, and shared apartments were once normal features of cities like New York and San Francisco, offering low-cost, flexible housing near jobs. 

Today, zoning codes, occupancy limits, minimum unit sizes, parking requirements, and hotel-style regulations make these arrangements illegal or financially impossible, even when the demand for these affordable solutions is keen. 

A five-bedroom apartment that could house five unrelated adults? Often illegal. A modernized boarding house with private rooms and shared kitchens? Banned by use codes written decades ago. Cities complain about the difficulties in providing affordable housing while simultaneously prohibiting the most affordable, space-efficient forms of housing that don’t require new land, massive subsidies, or luxury finishes. 

By criminalizing density inside buildings, not just height on the skyline, zoning forces households into larger, more expensive units than they actually want or need. The housing crisis isn’t just about not building enough; it’s about banning ways of living that used to make cities affordable by default.

We’ll explore some growing optimism in zoning changes across the US. But before that, let’s explore a giant city that has affordable housing and zoning in the world’s 4th largest economy. 

Tokyo is one of the largest metropolitan areas in the world, yet the average renter spends roughly 14–16% of household income on rent. In New York City and San Francisco, that number is closer to 30–40%, with some going up to 50% or more. (The traditional “cost-burdened” threshold for renters is put at 25% of total income.)

At the same time, Tokyo is not a shrinking city. It has added millions of residents over the past few decades while keeping rents relatively flat in real terms. Even as wages stagnated and interest rates fell globally, Tokyo avoided the extreme rent inflation seen in US superstar cities. The result is a city where middle-income households can still live near jobs, transit, and amenities without treating rent like a second tax.

The difference isn’t culture, construction costs, or generosity. It’s zoning. Japan uses a simple, national zoning code with only a dozen broad categories, most of which allow housing by default and permit mixed-use buildings as-of-right. There are no neighborhood vetoes, years-long hearings, or discretionary approvals that allow locals to block new apartments. 

Developers respond to demand quickly, replacing old buildings with denser ones and continuously adding housing near transit and employment centers. By contrast, cities like New York and San Francisco put tight caps on height, density, and use across most residential land, forcing growth into a handful of politically negotiated projects. 

The numbers tell the story: between 2002 and 2018, Tokyo’s housing stock grew about 24% while New York’s grew less than 10%. But it’s not just New York, Tokyo’s housing starts often significantly outpace those of major US cities, and in some years rival entire countries’ totals relative to population.

Austin offers a useful counterexample because it quietly did the opposite of most coastal cities: it allowed a lot of housing to get built. Over the past decade, Austin permitted housing at one of the highest per-capita rates in the country, adding tens of thousands of multifamily units while loosening rules around density, parking, and lot use. 

The results are measurable. From the peak in 2022 to 2024, Austin rents fell roughly 10–15%, according to multiple rental indices, even as national rents were flat or up slightly. Vacancy rates rose above 10% in some submarkets, giving renters leverage for the first time in years. This wasn’t driven by rent control or massive subsidies. It was driven by supply responding to demand. When enough units come online, landlords compete. When landlords compete, rents fall.

Zoning reform works, and cities that refuse to reform continue to punish renters. Austin didn’t eliminate zoning entirely, but it allowed more units per lot, reduced parking minimums, and made multifamily construction feasible across more of the city. In San Francisco, housing production averages well under 3 units per 1,000 residents per year, versus 6–10 per 1,000 in high-building Sunbelt metros like Austin. 

Housing affordability isn’t a mystery. It's arithmetic. 

But Austin isn’t alone, and the pattern is repeating in cities reforming zoning to allow more housing. Minneapolis eliminated single-family zoning citywide and removed parking minimums in 2018; since then, it has added housing faster than most Midwest peers and has seen rent growth slow dramatically, with real rents roughly flat while nearby metros rose. 

In California, cities that have embraced ADUs at scale, like Los Angeles, which has issued permits for tens of thousands of ADUs after statewide legalization, have added meaningful supply without subsidies or megaprojects. 

When cities legalize more units per lot, allow apartments by right, reduce parking mandates, and shorten approvals, housing supply responds quickly. And when supply responds, rents stop behaving like a rocket. 

These cities aren’t “solving” the housing shortage with magic, but they’re proving that zoning reform can have a meaningful impact. Something rent control, carve-outs, and press releases have failed to do for decades.

Affordability is driving political conversations around the country and will be a central issue in the upcoming midterm elections. Some are choosing to vote with their feet, as they say, and are moving to the Midwest, which has the lowest median home sales price in the country. That price, $319,400 in November, versus $409,200 nationwide, according to the National Association of Realtors, is an attainable number for many middle class Americans. Rents in major Midwestern cities are also lower than the national median, according to data from Bank of America, which defines the Midwest as Indiana, Iowa, Illinois, Kansas, Michigan, Minnesota, Ohio, Missouri, Wisconsin, Nebraska, North Dakota and South Dakota. Wages are an important factor in affordability, and year-over-year wage growth has been climbing more steadily in the Midwest over the past year than it has in other regions, Bank of America reported.

The largest landowner in the US bought another 937,000 acres of ranchland in New Mexico in late 2025, bringing his total to  2.7 million acres. (Delaware has 1.2 million acres total.) Stan Kroenke, whose portfolio of professional sports teams is worth $21.2 billion and includes the NFL’s Los Angeles Rams, the NHL’s Colorado Avalanche, the NBA’s Denver Nuggets and the Premier League’s Arsenal, also owns roughly 60 million square feet of commercial space, including huge sports venues in Inglewood, Calif., and Denver. Called “Silent Stan” for his reluctance to give interviews, Kroenke made his first fortune with large shopping centers, then married the Walmart heiress Ann Walton Kroenke in 1974 (Walmart stores anchored many of his shopping malls). The 2008 financial crisis prompted investors to seek out alternative investments, and America’s ultrawealthy turned to farmland to diversify their portfolios.

Construction of AI data centers is increasing demand for skilled tradespeople, and according to the International Brotherhood of Electrical Workers, the union representing electrical workers, some locals “are facing single data center projects that require two, three, sometimes four times their current membership.” The Bureau of Labor Statistics estimates that between 2024 and 2034, there will be a shortage of roughly 81,000 electricians annually. One McKinsey study estimated that between 2023-2030 an additional 130,000 electricians, 240,000 construction laborers and 150,000 construction supervisors would be needed in the US. Tech companies building data centers are competing with residential housing, hospitals, factories, and energy facilities. There’s already not enough workers to go around. “We have had a skilled construction worker shortage in America for years,” says Anirban Basu, chief economist of the Associated Builders and Contractors, a trade group for the construction industry.

Planning for retirement raises many questions. Have you considered how much it will cost, and how you’ll generate the income you’ll need to pay for it? For many, these questions can feel overwhelming, but answering them is a crucial step forward for a comfortable future.

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