A New Measure of the Local Regulatory Environment for Housing Markets: Wharton Residential Land Use Regulatory Index

62 Pages Posted: 13 Dec 2006

See all articles by Joseph Gyourko

Joseph Gyourko

University of Pennsylvania - Real Estate Department; National Bureau of Economic Research (NBER)

Albert Saiz

MIT Department of Urban Studies and Planning; IZA Institute of Labor Economics

Anita A. Summers

University of Pennsylvania - Business & Public Policy Department

Date Written: October 13, 2006

Abstract

The responses from a nationwide survey of residential land use regulation in over 2,600 communities across the U.S. are used to develop a series of indexes that capture the stringency of local regulatory environments. Factor analysis is used to combine the component indexes into a single, aggregate measure of regulatory constraint on development that allows us to rank areas by the degree of control over the residential land use environment. We call this measure the Wharton Residential Land Use Regulation Index (WRLURI). Key stylized facts arising from the data include that there is a strong positive correlation across the subcomponents that make up our regulation index. Practically speaking, this means that highly (lightly) regulated places tend to be highly (lightly) regulated on virtually all the dimensions by which we measure regulatory stringency. The stringency of regulation also is strongly positively correlated with measures of community wealth, so that it is the richer and more highly-educated places that have the most highly regulated land use environments. However, the stringency of regulation is weakly negatively correlated with population density. The fact that the densest communities are not the most highly regulated strongly suggests that the motivation for land use controls is not a fundamental scarcity in the sense that these places are 'running out of land'.

Keywords: zoning, housing markets, local regulation

JEL Classification: R14, R31, R38, R52

Suggested Citation

Gyourko, Joseph E. and Saiz, Albert and Summers, Anita A., A New Measure of the Local Regulatory Environment for Housing Markets: Wharton Residential Land Use Regulatory Index (October 13, 2006). Available at SSRN: https://ssrn.com/abstract=951463 or http://dx.doi.org/10.2139/ssrn.951463

Joseph E. Gyourko (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States
215-898-3003 (Phone)
215-573-2220 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Albert Saiz

MIT Department of Urban Studies and Planning ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States
617-252-1687 (Phone)
617-258-6991 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Anita A. Summers

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

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