Within Houston are two small, independent cities, Bellaire and West University, with zoning. Between 1970 and 1980 home prices in Bellaire and West University climbed more slowly than in many Houston communities, including those lacking private neighborhood restrictions against businesses and apartments.4 In fact, between 1990 and 1993, average annual home sale prices actually fell in the two zoned cities while sprinting up in a number of Houston neighborhoods, restricted and unrestricted.5 The financial risks to homes unshielded by zoning are, at best, greatly overstated.
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In Houston land uses tend to segregate themselves as investors respond to market incentives. Under the Houston system, heavy industry voluntarily locates on large tracts near rail lines or highways; apartments and stores seek thoroughfares; gas stations vie for busy intersections.9

With the market at work there's no need for government-imposed districting. Businesses that open inside quiet residential neighborhoods will compete poorly with establishments that enjoy the visibility and traffic count of a heavily traveled street. Businesses that thrive amidst homes often serve strong local demand.
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That's the Houston advantage: private property rights. True, Houston has many strict ordinances, but without zoning, citizens in Houston maintain over their property much of the control that other cities give to local government. Zoning dramatically increases the opportunity for public officials to manipulate private property for maximum political benefit and "impose costs on others at no cost to themselves,"15 writes economist Thomas Sowell. Under zoning, local goods and services reflect regulatory costs Houstonians avoid.

One such good is housing. Without zoning, Houston ranks consistently as the leader among major American cities for housing affordability. "It's more affordable here than any other large city in the nation," said University of Houston economist Barton Smith.16 According to Smith, one reason for this affordability is Houston's lack of zoning.17 And a federal report in 1991 cited zoning as a leading cause for the shortage of affordable housing in America.18 How does zoning push up the cost of housing?