MORE FREE EXCERPTS!!: Zoning is Good, Actually Housing: "Land, Labor, and Capital" for normal people: To understand why housing does not follow the usual rules of supply and demand, it helps to look at the cost of the land under buildings rather than the cost of the buildings themselves. Land is special. A factory turns raw materials into more valuable products and thereby creates new wealth. Land does not do that; it simply exists and produces nothing by itself. Even so, no factory or home can exist without a suitable piece of land. Because of that, the factory owner or homeowner must pay the landowner a form of rent for the right to use the site. Most urban land is bought rather than rented year by year, so this difference is easy to miss. Economists still use the word “rent” in a technical sense. When someone buys land outright, the price they pay is really just rent collected in one lump sum ahead of time. It is the "present value" of the land: the total of all the future rent the site is expected to produce, added up and expressed as one amount today. The rent for a location depends entirely on how well it is connected to the city’s roads, utilities, jobs, and other infrastructure that make work and living possible. In that sense, the rent does not come from any built-in value of the plot itself. It comes from the past work of earlier residents who built the physical and social systems that give the plot its economic usefulness. Because that value is created by the community, not by the landowner, one might expect economists to treat the cost of land as something quite different from the cost of buildings. They rarely do. The habit of mixing land cost into the overall price of housing comes from a deep disagreement about what land even is. Why do housing economists so seldom separate out the land? One reason is that mainstream (neoclassical) economists treat land and productive capital as interchangeable. The older classical view, from the eighteenth- and nineteenth-century political economy, says land is not capital. Those early economists were the first to name three distinct factors of production—labor, capital, and land—and they saw land as living off the other two, a source of waste. Land is necessary for production, but it adds no new value of its own. Its price reflects the value created by workers, businesses, and public infrastructure surrounding it, not any worth of the ground itself. The landowner does none of that work yet still takes a large share of the new value as rent. The usual story about housing scarcity is weakened by this failure to see how urban land rents work against the shared goal of more affordable homes. Early economists Adam Smith and David Ricardo recognized this distinction early on. Smith captured it in a memorable line: “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.” (The Wealth of Nations, 1776). Smith and Ricardo argued that the gains from rising land values should largely return to the community that creates them via taxation, and that taxation should fall more heavily on land owners than on worker wages (labor) or on factory owners holdings (capital). While this concept dates from the late 18th century it still resonates in economics. Noted 20th century economist Milton Friedman later acknowledged that a tax on land is “the least bad” tax when compared to most alternatives because land contributes nothing to production and can impede “real” capital growth when overpriced (“Time May Be” 2018). Their shared insight—that land’s rising value is an unearned claim on the efforts of others—leads directly to a clearer understanding of what economists mean by Rent.

FREE EXCERPT! From "Zoning is Good, Actually" Supply and Demand: Does Building More Homes Faster Solve the Problem? The widely held belief that simply building more housing will solve high prices rests on the claim that zoning restrictions artificially limit supply, a view drawn from basic economic theory and entrenched by the neoliberal policy shifts of the 1980s. For most people, “just build more housing” seems the obvious solution to high prices and that simply letting builders build anywhere they want, at whatever density they want, would solve this problem. The conventional argument behind this claim is that zoning, by restricting how urban land can be used, is the real culprit. Zoning rules, the argument goes, prevent the new supply needed to meet demand at prices ordinary wage-earning households can afford. That view comes straight out of Economics 101 and rests on a faith in the commonly understood “rules of supply and demand” that has shaped housing policy since the neoliberal reforms of the 1980s—the so-called Reagan-Thatcher revolution. Across the English-speaking world, governments shifted toward the belief that the private sector would house almost everyone if only the state would “get out of the way” (Dadkhah 2009). Yet evidence from city after city undercuts the claim that simply releasing more housing supply will bring prices down. Metropolitan areas that have added large numbers of new units continue to see prices climb faster than regions that have not. Nor is the problem ordinary building codes. Construction costs, adjusted for inflation, have remained largely stable for three decades (Zarenski 2016b). Land values, by contrast, have surged. In Vancouver, the nominal value of a typical building held roughly steady between 2006 and 2025—a real decline after adjusting for inflation—while the assessed value of the land beneath it rose more than 500 percent. Crucially, allowing greater density on a parcel does not reliably dilute that land cost; it often triggers an immediate speculative increase in the land-price “residual,”—the price the developer can pay after deducting profit and building development costs from current market price for housing— driven by forces far beyond zoning (Condon 2020a). Far from delivering the expected per-unit savings, upzoning frequently inflates the price of the land itself.