IDEAS home Printed from https://ideas.repec.org/a/sae/urbstu/v60y2023i14p2919-2940.html
   My bibliography  Save this article

Land-use reforms and housing costs: Does allowing for increased density lead to greater affordability?

Author

Listed:
  • Christina Stacy

    (Urban Institute, USA)

  • Chris Davis

    (Urban Institute, USA)

  • Yonah Slifkin Freemark

    (Urban Institute, USA)

  • Lydia Lo

    (Urban Institute, USA)

  • Graham MacDonald

    (Urban Institute, USA)

  • Vivian Zheng

    (Urban Institute, USA)

  • Rolf Pendall

    (University of Illinois at Urbana-Champaign, USA)

Abstract

We generate the first cross-city panel dataset of land-use reforms that increase or decrease allowed housing density and estimate their association with changes in housing supply and rents. To generate reform data, we use machine-learning algorithms to search US newspaper articles between 2000 and 2019, then manually code them to increase accuracy. We merge these data with US Postal Service information on per-city counts of addresses and Census data on demographics, rents, and units affordable to households of different incomes. We then estimate a fixed-effects model with city specific time trends to examine the relationships between land-use reforms and the supply and price of rental housing. We find that reforms that loosen restrictions are associated with a statistically significant 0.8% increase in housing supply within three to nine years of reform passage, accounting for new and existing stock. This increase occurs predominantly for units at the higher end of the rent price distribution; we find no statistically significant evidence that additional lower-cost units became available or moderated in cost in the years following reforms. However, impacts are positive across the affordability spectrum and we cannot rule out that impacts are equivalent across different income segments. Conversely, reforms that increase land-use restrictions and lower allowed densities are associated with increased median rents and a reduction in units affordable to middle-income renters.

Suggested Citation

  • Christina Stacy & Chris Davis & Yonah Slifkin Freemark & Lydia Lo & Graham MacDonald & Vivian Zheng & Rolf Pendall, 2023. "Land-use reforms and housing costs: Does allowing for increased density lead to greater affordability?," Urban Studies, Urban Studies Journal Limited, vol. 60(14), pages 2919-2940, November.
  • Handle: RePEc:sae:urbstu:v:60:y:2023:i:14:p:2919-2940
    DOI: 10.1177/00420980231159500
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/00420980231159500
    Download Restriction: no

    File URL: https://libkey.io/10.1177/00420980231159500?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Raymond Owens, 2010. "Housing Externalities," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 485-535, June.
    2. Zabel, Jeffrey & Dalton, Maurice, 2011. "The impact of minimum lot size regulations on house prices in Eastern Massachusetts," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 571-583.
    3. Ryan Greenaway-McGrevy & Gail Pacheco & Kade Sorensen, 2021. "The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand," Urban Studies, Urban Studies Journal Limited, vol. 58(5), pages 959-976, April.
    4. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    5. Daniel Kuhlmann, 2021. "Upzoning and Single-Family Housing Prices," Journal of the American Planning Association, Taylor & Francis Journals, vol. 87(3), pages 383-395, July.
    6. John M. Quigley & Steven Raphael, 2005. "Regulation and the High Cost of Housing in California," American Economic Review, American Economic Association, vol. 95(2), pages 323-328, May.
    7. Wooldridge, Jeffrey M., 1999. "Distribution-free estimation of some nonlinear panel data models," Journal of Econometrics, Elsevier, vol. 90(1), pages 77-97, May.
    8. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," American Economic Review, American Economic Association, vol. 95(2), pages 329-333, May.
    9. Jian Zhou & Daniel P. McMillen & John F. McDonald, 2008. "Land Values and the 1957 Comprehensive Amendment to the Chicago Zoning Ordinance," Urban Studies, Urban Studies Journal Limited, vol. 45(8), pages 1647-1661, July.
    10. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2006. "Urban growth and housing supply," Journal of Economic Geography, Oxford University Press, vol. 6(1), pages 71-89, January.
    11. Albert Saiz & Uri Simonsohn, 2013. "Proxying For Unobservable Variables With Internet Document-Frequency," Journal of the European Economic Association, European Economic Association, vol. 11(1), pages 137-165, February.
    12. Matlack, Janna L. & Vigdor, Jacob L., 2008. "Do rising tides lift all prices? Income inequality and housing affordability," Journal of Housing Economics, Elsevier, vol. 17(3), pages 212-224, September.
    13. Xiaodi Li, 2022. "Do new housing units in your backyard raise your rents? [Estimates of the size and source of price declines due to nearby foreclosures]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1309-1352.
    14. Jeremy Ginsberg & Matthew H. Mohebbi & Rajan S. Patel & Lynnette Brammer & Mark S. Smolinski & Larry Brilliant, 2009. "Detecting influenza epidemics using search engine query data," Nature, Nature, vol. 457(7232), pages 1012-1014, February.
    15. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
    16. Joseph Gyourko & Albert Saiz & Anita Summers, 2008. "A New Measure of the Local Regulatory Environment for Housing Markets: The Wharton Residential Land Use Regulatory Index," Urban Studies, Urban Studies Journal Limited, vol. 45(3), pages 693-729, March.
    17. Zahirovich-Herbert, Velma & Gibler, Karen M., 2014. "The effect of new residential construction on housing prices," Journal of Housing Economics, Elsevier, vol. 26(C), pages 1-18.
    18. Kok, Nils & Monkkonen, Paavo & Quigley, John M., 2014. "Land use regulations and the value of land and housing: An intra-metropolitan analysis," Journal of Urban Economics, Elsevier, vol. 81(C), pages 136-148.
    19. Joseph Gyourko & Albert Saiz, 2006. "Construction Costs And The Supply Of Housing Structure," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 661-680, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fang, Limin & Stewart, Nathan & Tyndall, Justin, 2023. "Homeowner politics and housing supply," Journal of Urban Economics, Elsevier, vol. 138(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gyourko, Joseph & Molloy, Raven, 2015. "Regulation and Housing Supply," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1289-1337, Elsevier.
    2. Michael Manville & Michael Lens & Paavo Monkkonen, 2022. "Zoning and affordability: A reply to Rodríguez-Pose and Storper," Urban Studies, Urban Studies Journal Limited, vol. 59(1), pages 36-58, January.
    3. John Landis & Vincent J. Reina, 2021. "Do Restrictive Land Use Regulations Make Housing More Expensive Everywhere?," Economic Development Quarterly, , vol. 35(4), pages 305-324, November.
    4. David Christafore & Susane Leguizamon, 2015. "Spatial Spillovers of Land Use Regulation in the United States," Housing Studies, Taylor & Francis Journals, vol. 30(3), pages 491-503, June.
    5. Oikarinen, Elias & Peltola, Risto & Valtonen, Eero, 2015. "Regional variation in the elasticity of supply of housing, and its determinants: The case of a small sparsely populated country," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 18-30.
    6. Paciorek, Andrew, 2013. "Supply constraints and housing market dynamics," Journal of Urban Economics, Elsevier, vol. 77(C), pages 11-26.
    7. Ganong, Peter & Shoag, Daniel, 2017. "Why has regional income convergence in the U.S. declined?," Journal of Urban Economics, Elsevier, vol. 102(C), pages 76-90.
    8. Lima, Ricardo Carvalho de Andrade & Silveira Neto, Raul da Mota, 2019. "Zoning ordinances and the housing market in developing countries: Evidence from Brazilian municipalities," Journal of Housing Economics, Elsevier, vol. 46(C).
    9. Xi Yang, 2021. "Land-Use Regulations and Urban Growth of African Americans," Economic Development Quarterly, , vol. 35(4), pages 338-350, November.
    10. Molloy, Raven & Nathanson, Charles G. & Paciorek, Andrew, 2022. "Housing supply and affordability: Evidence from rents, housing consumption and household location," Journal of Urban Economics, Elsevier, vol. 129(C).
    11. Dong, Yilin, 2016. "A note on geographical constraints and housing markets in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 15-21.
    12. Ritashree Chakrabarti & Junfu Zhang, 2015. "Unaffordable housing and local employment growth: Evidence from California municipalities," Urban Studies, Urban Studies Journal Limited, vol. 52(6), pages 1134-1151, May.
    13. Christian A. L. Hilber, 2019. "Immobilienpreise und Immobilienzyklen und die Rolle von Angebotsbeschränkungen [The impact of local supply constraints on house prices and price dynamics]," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 5(1), pages 37-65, November.
    14. Larson, William & Yezer, Anthony & Zhao, Weihua, 2022. "Urban planning policies and the cost of living in large cities," Regional Science and Urban Economics, Elsevier, vol. 96(C).
    15. Hilber, Christian A.L. & Robert-Nicoud, Frédéric, 2013. "On the origins of land use regulations: Theory and evidence from US metro areas," Journal of Urban Economics, Elsevier, vol. 75(C), pages 29-43.
    16. Christian A. L. Hilber & Wouter Vermeulen, 2016. "The Impact of Supply Constraints on House Prices in England," Economic Journal, Royal Economic Society, vol. 126(591), pages 358-405, March.
    17. Cun, Wukuang & Pesaran, M. Hashem, 2022. "A spatiotemporal equilibrium model of migration and housing interlinkages," Journal of Housing Economics, Elsevier, vol. 57(C).
    18. Jedwab, Remi & Barr, Jason & Brueckner, Jan K., 2022. "Cities Without Skylines: Worldwide Building-Height Gaps and their Possible Determinants and Implications," Journal of Urban Economics, Elsevier, vol. 132(C).
    19. Ritashree Chakrabarti & Junfu Zhang, 2010. "Unaffordable housing and local employment growth," New England Public Policy Center Working Paper 10-3, Federal Reserve Bank of Boston.
    20. Howard, Greg & Liebersohn, Jack, 2021. "Why is the rent so darn high? The role of growing demand to live in housing-supply-inelastic cities," Journal of Urban Economics, Elsevier, vol. 124(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:urbstu:v:60:y:2023:i:14:p:2919-2940. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.gla.ac.uk/departments/urbanstudiesjournal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.