Local Land Use Regulation and Housing Prices: How Relative Restrictiveness and Income Matter
82 Pages Posted: 17 May 2019 Last revised: 13 Jan 2020
Date Written: January 10, 2020
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: Suggested Citation