The Effects of Density Regulation on Metropolitan Housing Markets

47 Pages Posted: 2 Jul 2008 Last revised: 10 Apr 2012

Jonathan T. Rothwell

Gallup; George Washington University Institute of Public Policy

Date Written: June 4, 2009

Abstract

Though local land regulations have been studied extensively, few papers have studies how these regulations affect metropolitan markets, and of these, very few have been able to identify specific policies that drive the results. Instead scholars have relied on composite indexes, which are empirically noisy and generally taken as exogenous. The primary contribution of this paper is to use uniquely comprehensive survey data and multiple sources of information to clarify which regulations are the most important. Furthermore, a theoretical model of zoning is sketched, modeling it as a function of historic rural settlement patterns in order to limit taxation. Empirical evidence supports the theory on zoning’s origins and allows zoning to endogenously affect housing markets. The results of both this technique and simple OLS regressions suggest that roughly 20% of the variation in metropolitan housing growth can be explained through density regulations, and this result is remarkably robust to an alternative measurements and assumptions about other land regulations. 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 Classification: H7, L5, O18, R11, R50, R52, R58

Suggested Citation

Rothwell, Jonathan T., The Effects of Density Regulation on Metropolitan Housing Markets (June 4, 2009). Available at SSRN: https://ssrn.com/abstract=1154146 or http://dx.doi.org/10.2139/ssrn.1154146

Jonathan T. Rothwell (Contact Author)

Gallup ( email )

901 F St NW
Washington, DC 20004
United States

George Washington University Institute of Public Policy ( email )

2121 I Street NW
Washington, DC 20052
United States

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