Economics of Zoning, Land-Use Regulation, and Housing


ECONorthwest evaluated the effects of land-use regulations and zoning on housing availability and affordability.

The Challenge

Land use regulations pervade property markets. In recent years, concerns about the availability of affordable or workforce housing heightened interest in understanding the effects of land use regulations on property values. Land use regulations can raise housing prices by restricting supply and by increasing demand. Developing appropriate land use and housing policies requires understanding how supply restrictions and demand enhancements stemming from land use regulations affect local property markets.

The Results

In recent work, ECONorthwest economist Bryce Ward worked with researchers at Harvard's Rappaport Institute for Greater Boston and the Pioneer Institute for Public Policy Research to assess the effect of land use regulations on the supply of housing and housing prices in 187 communities in Eastern Massachusetts.

Using a new, very detailed dataset of zoning and land use regulations in the region, this analysis found that the zoning practices common to many communities in the region (particularly large lot zoning, restrictions on development near wetlands, septic rules, and subdivision requirements above the state minimums) were significantly restricting the development of new homes and contributing to the rapid increase in housing prices in the Boston area.

Building on these findings, the authors identified four structural problems with the current regulatory system and proposed several policy approaches that might help address them.

The results of this study and the policy recommendations were presented to the leaders of the Massachusetts state legislature, members of the governor's staff, and business and community leaders throughout the region.

Other examples of our work in this area include:

Barriers to Affordable Housing

For the U.S. Department of Housing and Urban Development (HUD), ECONorthwest worked with the National Center for Smart Growth Education and Research to evaluate methods for identifying barriers to affordable housing provision. Using detailed GIS data combined with a qualitative evaluation of zoning codes in five case study metro areas, the project compared actual to predicted development patterns to identify areas where local development code might restrict new multi-family development.

Subdivision Controls and Affordable Housing

Also for the US Department of Housing and Urban Development (HUD), ECONorthwest assisted the National Home Builders Association with an assessment of subdivision controls as a regulatory barrier to affordable housing. This project developed a nationally representative sample of subdivision requirements and qualitatively and quantitatively assessed their implications for the cost of development.

Interested in learning more about how ECONorthwest can help you with your next project? Our toolbox is full and our staff enjoy meeting new challenges.

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