Local Land Use Regulation and Housing Prices: How Relative Restrictiveness and Income Matter

82 Pages Posted: 17 May 2019 Last revised: 13 Jan 2020

See all articles by Desen Lin

Desen Lin

University of Pennsylvania, Department of Economics

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Date Written: January 10, 2020

Abstract

Local land use regulation may restrict housing supply, with more stringent regulation associated with higher local housing prices, as demonstrated by the empirical literature. Nonetheless, demand spillover to surrounding communities, may moderate local house price increases. We develop and test a model for how spillovers affect local price outcomes. Using data for California, we show that relative income and relative restrictiveness matter for the impact of local regulation on local housing prices.

Keywords: housing prices, land use regulation, general equilibrium, spillover effect, California

JEL Classification: R10, R13, R31, R52, R58

Suggested Citation

Lin, Desen and Wachter, Susan M., Local Land Use Regulation and Housing Prices: How Relative Restrictiveness and Income Matter (January 10, 2020). Available at SSRN: https://ssrn.com/abstract=3363947 or http://dx.doi.org/10.2139/ssrn.3363947

Desen Lin (Contact Author)

University of Pennsylvania, Department of Economics ( email )

PCPSE 535, 133 South 36th Street
Philadelphia, PA 19104
United States

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

Register to save articles to
your library

Register

Paper statistics

Downloads
90
Abstract Views
447
rank
294,367
PlumX Metrics