The Illiberalism of the Local

In Village of Euclid v. Ambler Realty Co., Justice Sutherland handed local governments near-total power to reshape neighborhoods on the basis of taste and social preference, even likening an apartment block in a single-family area to “a pig in the parlor instead of the barnyard.” That comparison mattered because it announced a new rule: you no longer had to show real, measurable harm to stop someone from using their property. Courts moved away from old nuisance laws that demanded evidence and replaced it with discretionary control over how places should look and who should live where. Zoning, after Euclid, stopped being about preventing real dangers and started doing social work—protecting property values and sorting people by class.

Today roughly three out of four acres of residential land in the country’s most productive metro areas is reserved for detached single-family houses. That fact isn’t just a supply problem. It criminalizes the way Americans actually lived in dense, mixed neighborhoods before zoning, such as duplexes, small apartment buildings, corner groceries, and workers’ families above shops. The single-family rule is a modern invention, but Euclid gave it constitutional armor. The result is predictable: we’ve legally carved out entire cities of exclusion and, in doing so, outlawed the traditional, walkable city.

Euclid baked in a lopsided deal. State and local governments walked away with sweeping authority to say what could be built and where, all under the banner of the police power. Property owners, meanwhile, were left with rights that existed only if their neighbors were comfortable with them. What used to come with ownership—the basic freedom to use your land, build on it, and sell it—slowly turned into something you had to ask permission for, usually from a local majority with strong feelings about who belonged nearby.

There was also a moment when the Court hesitated. In 1928, Nectow v. City of Cambridge suggested that zoning might need to serve some real public purpose, not just the preferences or anxieties of nearby homeowners. That constraint barely survived the decade. After Euclid, aesthetic complaints and fears about density were treated as if they were matters of constitutional importance. In practice, the ordinary right to build on land you own has been hollowed out, replaced by a system where veto power lives next door. The solution to this crisis is not judicial—overturning Euclid through litigation—but legislative: states must reclaim the police power that Euclid affirmed to preempt local veto authority.

The mathematical proof of artificial scarcity

Between 1980 and 2022 nominal wages in the United States rose about 410 percent while median house prices jumped roughly 576 percent. That gap—housing outpacing pay by about 1.4 times over four decades—didn’t happen because people suddenly became more productive. It happened because governments locked down supply. Zoning rules, height caps, parking mandates, slow permitting, and the political power of neighborhood associations all act like a chokehold. The scarcity premium created by those limits isn’t an innocent market signal. It’s a deliberate, state-backed transfer of wealth from younger, poorer buyers to entrenched homeowners. The middle class’s main asset has ballooned not because wages did, but because local power protected property values.

Economists call the outcome the “regulatory tax”—the wedge between what it costs to build and what buyers actually pay. In places like Manhattan and San Francisco, scholars such as Glaeser and Gyourko put that wedge as high as half the unit’s value in extreme cases. That’s not the nationwide norm, but it shows how bad things can get in our most productive cities. In plain terms: a huge slice of a house’s price can be the cost of getting past exclusionary rules and politics, not the cost of materials, labor, or land.

New York is a textbook case of the anti-commons, where too many people with veto power wreck a shared resource. In 1961 the city’s zoning could have housed roughly 55 million people; today the legal capacity sits near 11 million—roughly an 80 percent fall. That collapse did not come from one master plan. It came from thousands of small votes: council members acceding to neighborhood groups, community boards pushing downzoning, local politicians defending incumbent homeowners. Call it “member deference” if you like. The point is practical: every tiny carve-out, every lower height limit, every parking rule chipped away at the city’s ability to grow. The result is a city that has been slowly fenced in by local vetoes.

Even policies meant to help make housing affordable too often make the problem worse. Inclusionary zoning sounds good on paper—require developers to include below-market units—but it functions like a production tax. City halls and state legislatures force builders to deliver subsidies, and developers respond the same way businesses always do: they pass costs along. Research on California’s programs finds market-rate prices actually rise a bit faster after IZ rules kick in, because the subsidy raises the effective cost of building. In real terms that means fewer new units and higher prices for people who earn too much to get subsidized help but too little to afford the inflated market. We create a narrow safety net and, at the same time, tighten the noose on middle-income buyers.

The Montana miracle

Montana’s 2023–2025 legislative cycle turned into a real experiment in rebuilding how housing gets made. Senate Bill 382, the Montana Land Use Planning Act, rewired the relationship between property owners and local governments. The mechanism was simple: move public input out of project-by-project hearings, where neighbors can veto a single development, and into long-range planning. Cities now must quantify how many homes they need and zone enough density to meet that need by right. If a project follows the plan and the building code, it gets administrative sign-off—no discretionary hearings, no one-off vetoes. That front-loading strips the most obvious choke points out of the process. You can’t stop a conforming project because you don’t like it.

The Montana Zoning Atlas did the heavy lifting that politics rarely does: it turned legal clutter into maps. Using parcel-level GIS, the Atlas exposed rules that quietly made housing impossible. In Missoula, for example, the city technically allowed duplexes—until the map showed that minimum lot-size rules effectively banned them on 16 percent of the land. That kind of proof punctured the usual defense: “We already allow it.” Once the invisible barriers were visible, data stopped being abstract and became political ammunition. Municipalities could no longer hide behind vague claims of permissive zoning, and opposition to state preemption finally lost its cover.

The reforms survived a major court test. In late 2024 the Montana Supreme Court lifted a preliminary injunction in Montanans Against Irresponsible Densification (MAID) v. State, finding that “thin evidence of imminent harm” rooted in “generalized fears” couldn’t block the state from using its police power to address a housing crisis. The justices dismissed claims that sensible densification violated property rights or environmental law. The message was blunt: individual property interests are still subject to the state’s duty to the general welfare. Practically speaking, one neighborhood’s preference can’t hold an entire state hostage to manufactured scarcity.

The path forward

People who protest state preemption as an attack on local democracy are looking at the problem upside down. Too often what passes for local rule is simply organized incumbency, as council members defer to loud neighborhood groups and planning boards bend to homeowners with time and money. The people who moved in first use every procedural tool to keep newcomers out. The result isn’t democracy so much as hierarchy dressed up as self-government. Politically connected owners protect their equity, while builders and young families eat the losses. The real question isn’t whether local power exists. It’s what we let “local democracy” mean when it systematically privileges the past over the present.

The claim that densifying neighborhoods will wreck property values or the environment doesn’t hold up under scrutiny, which is exactly what the Montana Supreme Court found in MAID v. State. Those arguments are mostly hypothetical fear dressed as evidence. The real, measurable harm has been happening the other way around: zoning’s administrative machinery quietly strips away the right to use property. Endless discretionary approvals, design-review fights, minimum-lot rules, and parking mandates—these bureaucratic gates—can stop a project even if it meets every reasonable safety and code standard. The right question is not whether a new building will change someone’s view. It’s whether a state should allow a neighborhood’s taste and speculation to nullify a property owner’s right to build.

In Maine, the town of Calais used an old livestock ordinance to strip a family of the simple right to keep chickens, even though the state now has a Right to Food amendment saying people can grow and raise their own food. In Pennsylvania, a home auto shop that had operated for 24 years was suddenly shut down after what the Institute for Justice says began as a personal spat with a township supervisor. Those aren’t petty zoning errors. They are fundamental failures of local governance. When a state that claims to uphold liberty can’t stop a neighbor or a local official from wiping out a family’s food source or a small business on private land, it has failed at its basic job: protecting people from arbitrary local power.

There are signs that change can be bipartisan. Regional efforts like BRAND West—a coalition of Western state legislators—show lawmakers on both sides are starting to admit that buying more vouchers or carving out tiny subsidy programs won’t fix a supply problem created by rules. The real work is undoing the barriers that manufacture scarcity in the first place: remove discretionary neighborhood vetoes, set objective by-right standards, and make approvals predictable. This is the work of legislative preemption, not judicial fiat. That is where constitutional integrity lives. It is found not in pleading for nicer neighbors, but in rebuilding a system where individual rights matter more than municipal selfishness.

Featured image is SPRAWL, by Mark Strozier