When housing prices surge or neighborhoods transform overnight, we often blame developers, investors, or market forces. But lurking behind these visible actors is a less obvious culprit: the planning decisions made in city halls, zoning boards, and planning commissions years or even decades earlier. City planning doesn’t just influence how many homes get built—it can be the decisive factor that either unleashes a wave of new housing or chokes off supply for generations.
Consider what happens when a city decides to preserve the “character” of a neighborhood through restrictive zoning. By limiting buildings to single-family homes on large lots, planners ensure that only a handful of housing units can exist on any given acre. In a stable population, this might work fine. But when demand increases—whether from job growth, immigration, or simply people wanting to live in desirable areas—the housing stock can’t respond. The same physical space that could accommodate hundreds of apartments instead holds dozens of houses. Tokyo, by contrast, has relatively flexible zoning that allows property owners to rebuild at higher densities, and the city has managed to keep housing costs more stable than other global capitals despite being one of the world’s largest metropolitan areas.
The impact of planning decisions extends far beyond simple density restrictions. When cities require large minimum lot sizes, mandate extensive parking, or impose height limits across broad swaths of land, they’re making it financially impossible to build anything but expensive housing. A developer might look at a parcel and realize that after accounting for parking requirements, setback rules, and height restrictions, they can only fit eight units where twenty would make economic sense. Those twelve missing homes don’t just represent lost housing—they represent families who will compete for the limited existing stock, driving up prices for everyone.
Permitting processes themselves can dramatically alter housing inventory even when zoning technically allows development. In some cities, getting approval for a new apartment building requires navigating multiple review boards, neighborhood meetings, environmental studies, and design committees over a timeline that stretches years. Each delay adds carrying costs for developers, and each requirement adds expense. Eventually, only large, well-capitalized firms can afford to navigate the gauntlet, and they’ll only do so for projects with high enough returns to justify the risk and wait time. This naturally pushes development toward luxury housing while making modest, middle-income housing financially unviable.
The geography of where cities allow housing matters as much as how much they allow. When planning concentrates all new development in a few designated areas while preserving vast swaths of existing neighborhoods, it creates artificial scarcity in the protected zones and can overwhelm the areas open to change. San Francisco’s eastern neighborhoods have absorbed most new housing while the western half remains largely frozen in time, leading to dramatic neighborhood transformation in some areas and stagnation in others. This pattern also forces longer commutes, as people who work in job-rich areas can’t find housing nearby.
Transportation planning intersects with housing in ways that compound or alleviate scarcity. Cities that invest heavily in transit infrastructure while allowing development near stations multiply their housing capacity without increasing car traffic. Conversely, cities that expand road networks while maintaining low-density zoning create sprawl without meaningfully increasing housing options for people at different income levels. The difference isn’t just aesthetic—it’s thousands or tens of thousands of homes over time.
Historic preservation, while valuable for protecting architectural heritage, can inadvertently freeze housing supply when applied too broadly. Designating entire neighborhoods as historic districts means that even as demand grows, supply cannot. A brownstone that might house twelve families in converted apartments instead houses one or two because the exterior can’t be modified and the building can’t be replaced. Multiply this across hundreds of blocks, and you’ve locked away a substantial portion of potential housing inventory in amber.
Some of the most dramatic housing inventory changes come from planning decisions that work in the opposite direction—liberalizing rules and allowing more construction. Minneapolis eliminated single-family-only zoning citywide, allowing duplexes and triplexes throughout neighborhoods that were previously restricted. This didn’t trigger immediate transformation, but it removed the legal barriers that prevented gradual densification as properties turned over. Auckland, New Zealand, upzoned large portions of the city and saw housing construction accelerate substantially. These examples show that planning changes can increase inventory just as powerfully as restrictions decrease it.
The feedback loops created by planning decisions can be self-reinforcing. When cities restrict housing supply and prices rise, existing homeowners develop a vested interest in maintaining those restrictions to protect their property values. They become a political constituency for continued limits on housing. Meanwhile, people who might have moved to the city never arrive and thus never have a voice in its planning debates. The result is a political economy that bakes in housing scarcity, even as the broader region suffers from it.
Parking requirements deserve special attention as a planning tool that dramatically affects housing inventory while seeming mundane. When every apartment must come with one or two parking spaces, builders must either construct expensive underground garages or dedicate ground-floor space to parking. In both cases, the cost per unit rises substantially, and the number of units that can be built shrinks. In expensive cities, parking requirements can add fifty thousand dollars or more to the cost of each apartment. Remove those requirements, and suddenly projects that weren’t economically feasible become viable, and the housing inventory grows.
The temporal dimension of planning matters too. Decisions made decades ago continue to shape housing inventory today, while current decisions will determine what’s possible decades hence. The apartment buildings constructed in New York, Chicago, and Washington during the early twentieth century—before strict zoning limited density—continue to provide relatively affordable housing today. Cities that never built that inventory or demolished it without replacement face much tighter markets. Similarly, today’s planning decisions about what can be built near new transit lines or in aging commercial districts will determine whether those areas become housing-rich or remain constrained.
Perhaps most importantly, planning shapes not just quantity but variety. When rules mandate that only certain types of housing can be built—only large single-family homes here, only luxury towers there—the housing stock becomes homogeneous. This means fewer options for people at different life stages, income levels, and household compositions. A city with good planning offers everything from small apartments to large family homes, from affordable options to luxury units, distributed throughout the metropolitan area rather than segregated by type.
The evidence from cities worldwide demonstrates that planning is neither neutral nor predetermined. It’s a powerful tool that can either facilitate or obstruct housing supply at scale. Cities facing housing shortages consistently share certain planning characteristics: extensive use of single-family zoning, restrictive height limits, burdensome approval processes, and limited areas open to development. Cities that maintain more reasonable housing costs despite strong demand tend to have more flexible frameworks that allow supply to respond to demand.
Changing course requires recognizing that past planning decisions, however well-intentioned, may no longer serve current needs. A zoning map drawn in 1950 for a city of half a million people probably isn’t optimal for a metropolitan area of three million. Neighborhood preservation goals that made sense in an era of urban decline may need rethinking in an era of urban revival. The question isn’t whether to plan—all successful cities plan—but whether planning facilitates or frustrates the housing supply needed for a growing, thriving city.
The connection between planning and housing inventory isn’t abstract theory. It’s visible in the rent you pay, the commute you endure, and whether your children can afford to live in the city where they grew up. City planning might not make headlines, but it shapes the physical reality of how many homes exist and where they’re located. Done well, it can ensure that housing supply keeps pace with demand. Done poorly, it guarantees scarcity, high prices, and the displacement of people who can no longer afford to stay.
