by Jess Fields
Texas Public Policy Foundation
August 13, 2014
When zoning is strict in an area of high property values, it might have the effect of inflating values well beyond the market level and also shifting uses throughout the rest of a municipality. For example, if tall office buildings are only allowed in downtown, the restriction on the supply of land available for such buildings could lead to an artificial increase in the price of that land. A resultant change in behavior occurs whereby prospective developers create alternatives to tall office buildings, such as low-rise office buildings and corporate campuses, in other areas where zoning allows such alternatives. Again, this could artificially increase land prices in and around the zone where the alternatives are allowed, which in turn could also affect residential properties.

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