Houston doesn’t have zoning. As I have written about previously here on the blog, this doesn’t mean nearly as much as you would think. Sure, Houston’s municipal government doesn’t segregate uses or expressly regulate densities. But as my Market Urbanism colleague Michael Lewyn has documented, city officials do regulate lot sizes, setbacks, and parking requirements. They also enforce private deed restrictions, which blanket many of the city’s residential neighborhoods.

A deed restriction is a legal agreement among neighbors about how they can and cannot use their property. In most cities, deed restrictions are purely private and often fairly marginal, adding rules on top of zoning that property owners must follow. But in Houston, deed restrictions do most of the heavy lifting typically covered by zoning, including delineating permissible uses and design standards. Whenever I point out that Houston has relatively light land-use regulations (and is enjoying the benefits), folks often respond that the city’s deed restrictions are basically zoning. This couldn’t be further from the truth.

Before I turn to the essential differences, it’s worth first observing how Houston’s deed restrictions are like any other city’s zoning. First, like zoning, Houston’s deed restrictions are almost universally designed to prop up the values of single-family houses. Despite the weak evidence for a use segregation-property values connection, this justification for zoning goes back to the program’s roots in the 1920s. Many of Houston’s nicest residential neighborhoods, like River Oaks and Tanglewood, follow this line of thinking, enforcing tight deed restrictions on residents that come out looking a lot like zoned neighborhoods in nearby municipalities like Bellaire and Jersey Village.

Second, both zoning and Houston’s deed restrictions are enforced by government officials at taxpayer expense. In most other cities, deed restrictions are overseen and enforced by a private group like a homeowners association, funding enforcement through required HOA fees. But in the aftermath of the failed 1962 referendum to adopt zoning, the Texas state legislature gave Houston the right to publicly enforce deed restrictions. This means that Houston taxpayers pick up the tab to enforce private rules regarding everything from land use to lot sizes. In 2003, these rules were expanded to allow the city to enforce restrictions related to minor issues like landscaping and architecture. In practice, this looks a lot like zoning.

Beyond these superficial similarities, deed restrictions are different from zoning in at least three crucial ways. First, deed restrictions don’t apply to the whole city. Writing in 1972, in his fantastic survey of Houston’s land-use regulations, Bernard Siegan estimates that no more than 25 percent of the city is covered by deed restrictions. Teddy Kapur, writing 30 years later, suggests a similar percentage. We have no real way of checking these estimates, since deed restrictions aren’t compiled in any kind of publicly available GIS format, but this generally comports with other estimates floating around. This is compared to zoning, which regulates 100 percent of urban land, regardless of the needs or preferences of local land users.

Where deed restrictions exist at all, they almost exclusively apply to single-family residential neighborhoods. Industrial areas and townhouses are only occasionally subject to deed restrictions, and commercial corridors and multifamily neighborhoods are almost never subject to them. Vacant land and agricultural land is also almost never subject to deed restrictions, meaning that unlike in zoned cities, this land is free to develop into the use and form most in demand at that particular time and place. In most zoned cities, acres of vacant land sit under-utilized because it’s zoned for uneconomical uses. This difference is important, since it means that policymakers don’t have to make (almost certainly wrong) guesses about the optimal use and density for all lots across all of time. All of this taken together means that nearly of three quarters of the Houston urban landscape isn’t subject to anything remotely resembling zoning and is free to change and adapt over time.

Second, deed restrictions are designed and initially implemented by people with the information and incentives to get the regulations right. Land-use regulation is, at its heart, a knowledge problem: how do we regulate, to what extent, and where? Unlike the zoning commissions or planners typically tasked with drafting zoning ordinances, the residential developers who normally develop deed restrictions have a clear, immediate signal about the desirability of their deed restrictions and a strong incentive to get them right through rising and falling property values.[1] Developers crafting deed restrictions under competitive conditions will regulate up to the point of maximizing property values and no more. To quote Siegan:

The landowner who engages, in effect, in exclusionary land use practices by restricting ‘excessive’ amounts of land risks suffering the economic sanctions of the private market, a hazard never confronted by local legislators. (79)

That is to say, implement too little private regulation, and your houses sell for less since prospective homebuyers aren’t confident that they will enjoy the amenities (e.g. purely residential community character) that they prefer. Implement too much private regulation, on the other hand, and your houses sell for less since prospective homebuyers will be forced to overproduce certain public goods (e.g. landscaping, design standards), or won’t be able to use their property as they might like (e.g. as home-based businesses). Thus, the market disciplines deed restrictions in a way that zoning is almost never disciplined, since shopping among neighborhoods is much easier than shopping among entire municipalities.

These market pressures lead to at least two interesting outcomes that distinguish deed restrictions from zoning: First, certain exclusionary regulations that are the norm in zoned cities—e.g. one acre minimum lot sizes—are relatively unheard of in Houston, since they would make it next to impossible for residential developers to outbid other land users. Second, even among single-family residential neighborhoods, the form and strictness of deed restrictions may vary by income and other factors, reflecting the obvious fact that different groups of people may have different preferences regarding how strictly—and in what way—their neighborhood should be regulated. This leads to an incredible amount of diversity among Houston’s deed restricted neighborhoods, a far cry from the standard “R-1” zoning district.

Third and finally, deed restrictions can and do adapt to changing market conditions over time. Your typical zoning ordinance is well over 40 years old. True, zoning can change through mechanisms like rezonings or variances, but these are ad hoc and frequently arbitrary, and rarely change the regulation for an entire area of town—let alone single-family residential neighborhoods. Full zoning rewrites are cumbersome and contentious. They are infrequent, and even when they occur, policymakers are loathe fundamentally change any particular neighborhood’s rules for fear of agitating vocal proponents of the status quo, irrationally afraid that any official zoning change would destroy the value of their homes. A planning professor of mine once joked, “Two things will survive the apocalypse: cockroaches and single-family zoning.”

Compare that to Houston’s deed restrictions, which nearly always incorporate expiration dates, after which the restrictions must be approved by a majority of residents every 10 or so years depending on the deed’s terms. At these intervals, residents can and occasionally do let the restrictions expire, allowing single-family neighborhoods to incorporate townhomes, apartments, and small businesses. As Kapur notes, however, residents often use these intervals as an opportunity to reconfigure the deed to reflect changing market conditions. Particularly in older neighborhoods within the 610 loop, where the original terms of the deed restrictions are often long-expired, residents are made to regularly come together to debate and discuss how they think their community should be regulated as part of the re-approval process, meeting as equals with relatively little top-down control of process.[2] This leads to the de facto upzoning of high-demand Houston single-family residential neighborhoods with surprisingly frequency, an unthinkable outcome in most zoned cities.

Outside of these regular official intervals, deed restrictions also regularly unofficially wither away, either as infractions build up unaddressed or residents forget to re-approve the deeds. This withering away of yesteryear’s regulations can and often does happen in Houston, allowing formerly single-family residential neighborhoods to gradually transform into mixed-use urban neighborhoods. Again, this is almost unimaginable in any zoned city, where regulations older than you or I are still on the books and fully enforced, regardless of how much the neighborhood in question has changed.

Make no mistake: public enforcement acts as an artificial subsidy for deed restrictions in Houston, almost certainly producing deeds that are more extensive and longer lasting than they might otherwise be under market conditions. Yet even allowing for this minor asterisk, it’s clear that Houston’s system of quasi-private land regulation is very different—and in certain key respects much better—than zoning.

Siegan concludes his discussion of this topic by perceptively noting that zoning implicitly tries to answer two very difficult questions:

What is the extent of protection to which property owners are entitled? What powers should existing residents have to exclude other people and things from the municipality?[3]

Zoning addresses these questions using an opaque political process in which certain privileged special interests—namely homeowners—may impose their particular preferences across all time. Houston’s deed restrictions, on the other hand, are constantly rediscovering the answers to these questions. It all comes back to consumer preferences: if consumers desire things like large lots and ample off-street parking and are willing to pay more for the extra land, developers will respond by bidding up the land and implementing tight deed restrictions. If they either don’t want these restrictions, or aren’t willing to pay more for them, developers might still build the houses but with deed restrictions that allow for smaller lots, higher lot coverage, or certain complimentary commercial uses.

In this way, the process of identifying the optimal mix of land-use regulation is a dynamic discovery process, subject to ongoing changes in local conditions. As the costs of zoning stasis in cities like San Francisco become clearer, the value of understanding Houston’s uniquely dynamic system of deed restrictions only rises.

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[1] This should not be misinterpreted as an anti-planning (or anti-planner) screed. As I have written here on the blog, planners are very good at many things and deserve more respect in these spheres. That said, nobody—however smart and well-meaning—has the necessary knowledge to plan things like future land uses and densities for an entire city.

[2] This puts much of what we might otherwise call the “deliberative” or “participatory” planning in other cities to shame.

[3] These questions are posed on page 84. For Siegan’s full discussion of this issue, I strongly urge you to read Chapter 3 of “Land Use Without Zoning.”