Blog post 3

Carson Billings

FIN 180

Hansz

Spring 2011

The Government Zone

One of the most important activity centers in real estate is the government. The government is not important because it helps to create wealth, but rather because it can be a great immovable hindrance to someone that has a specific plan for a specific piece of property. The government can prove to be a problem in many ways, but one of the most common annoyances brought on by the government in real estate is zoning,

Zoning restrictions are the most commonly used tool by government to control how people use their property. There are seven main zoning categories agricultural, low density residential, high density residential, commercial, light industrial, heavy industrial, and special use.(Hansz) Zoning restrictions are designed to limit what a piece of property can be used for, but many of the laws go even further, "In addition to restricting the uses that can be made of land and buildings, zoning laws may also regulate the dimensional requirements for lots and for buildings on property located within the jurisdiction, the density of development, and whether you can keep certain kinds of animals."(RHOL)

Zoning related issues can be a major problem, not just in the United States, but around the world. For many years in South Africa's Cape Town zoning restrictions prevented high density housing from being created. These restrictions wound up pushing poor people further and further away from the city and their jobs. Now that the government is listening to what the needs of the people are they are begging to amend zoning plans to allow for high density housing to be built.(IOL) The problem with this example is that the zoning laws that were designed to protect people wound up causing people to suffer. If these laws had never been enacted in the first place supply and demand would have recognized that there was a need for high density housing, and it would have created suitable housing without the paperwork and headaches created by the government.

While zoning can help alleviate problems examples of this are few and far between. Unless the local government pays close attention to the way their cities and counties are developing, and adjust zoning accordingly, problems can get out of hand and the same laws which were enacted to protect the public end up being a hindrance to both the free market and the public as a whole. Zoning as a whole is contrary to a free market society because it creates artificial rules and boundaries that skew the effects of supply and demand.

Sources

Hansz, Andrew Real Estate Analysis Environments and Activities. IA: Kendall Hunt 2010

"Zoning Issues" RHOL.com <http://www.rental-housing.com/invest/zoning.htm>

"Check zoning laws before protesting about property developments" IOL Property. 7 April, 2011