Houston loves apartments.

Photographer: Spencer Platt/Getty Images

They Know How to Build Apartments in Houston

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Houston, where I am this week, is infamous for its sprawl. The city itself covers 600 square miles, and its suburbs keep expanding in almost all directions.

Yet here's something else Houston should probably be known for: apartment buildings. Apartments make up a higher percentage of housing units here than in almost any other big U.S. city.

Note that Dallas is also high on that list. In both cities, the apartment construction continues. Developers in the Dallas and Houston metropolitan areas have been building more multi-unit dwellings in recent years than their counterparts in any other metropolitan area except New York -- far more than in the more-populous San Francisco-San Jose area and even slightly more than in much-bigger metropolitan Los Angeles:

One lesson I take from these charts is that there really does seem to be a lot of demand for apartments. Critics of higher-density development sometimes decry it as something being forced on cities by government. But it's awfully hard to argue that about Dallas and Houston.

Houston in particular is (in)famous for its largely unplanned, zoning-free approach to development. The city actually does have a planning department, and enough land-use rules to amount to what South Texas College of Law professor Matthew Festa calls "de facto zoning." But the Wharton Residential Land Use Regulatory Index nonetheless ranks it as one of the least restrictive metropolitan areas in the country for housing development -- and metropolitan Dallas as even less restrictive. If developers are building lots of apartments in and around Dallas and Houston, it's because they think they think there's demand.

Some of that demand  is about living close-in, in walkable neighborhoods with public transportation close by. Yes, even in Houston, that's becoming a thing. But a lot of it is surely just demand for housing that a non-wealthy person can afford. Houston and Dallas have been building lots of it. Despite strong job growth in recent years, San Francisco, San Jose and the cities around them have not. That's partly because they're already more tightly packed than Houston and Dallas, and face geographical limits on expansion that Texas cities generally do not. But it's also just because it's so danged hard to get permission to put up apartment buildings there. Which is a shame.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Susan Warren at susanwarren@bloomberg.net