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The Effects of Density Regulation on Metropolitan Housing Markets

Jonathan T. Rothwell
Princeton University - Woodrow Wilson School of Public and International Affairs


June 4, 2009


Abstract:     
Many scholars have identified local land regulations as an important factor in local housing markets. Fewer papers have studies how these regulations affect metropolitan markets, and of these, none have been able to point to specific policies that drive the results. Instead scholars have relied on composite indexes, which are generally taken as exogenous. First, this paper uses uniquely comprehensive survey data and multiple sources of information to clarify which regulations are the most important, and it finds that anti-density (or exclusionary) zoning consistently outperforms other measures of regulation used in the literature in predicting metropolitan housing supply growth. Second, anti-density zoning is modeled as a function of historic rural settlement patterns, and empirical evidence is marshaled in support of this theory, allowing zoning to endogenously affect housing markets. The results suggest that roughly 20% of the variation in metropolitan housing growth can be explained through density regulations, and this result is remarkably robust to different measurements of density regulation and different assumptions about other aspects of land regulation. The results further show that anti-density regulation inflates prices in the face of demand shocks.

Keywords: zoning, housing supply, regional growth, land regulation

JEL Classifications: H7, L5, O18, R11, R50, R52, R58

Working Paper Series

Date posted: July 02, 2008 ; Last revised: June 07, 2009

Suggested Citation

Rothwell, Jonathan T., The Effects of Density Regulation on Metropolitan Housing Markets (June 4, 2009). Available at SSRN: http://ssrn.com/abstract=1154146


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Contact Information

Jonathan T. Rothwell (Contact Author)
Princeton University - Woodrow Wilson School of Public and International Affairs ( email )
Princeton University
Princeton, NJ 08544-1021
United States
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