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The impact of local residential land use restrictions on land values across and within single family housing markets

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  • Gyourko, Joe
  • Krimmel, Jacob

Abstract

We provide estimates of the impact of restrictive residential land use environments on the price of land across major American housing markets. Using micro data on vacant land purchased to develop single family housing, we implement a new empirical strategy for estimating so-called ‘zoning taxes’ – the amount by which land prices are bid up due to supply side regulations. Our results are broadly consistent with previous findings that zoning taxes are especially burdensome in large coastal markets. However, our more recent data indicates that price impacts in the big west coast markets now are the largest in the nation. In the San Francisco, Los Angeles, and Seattle metropolitan areas, the price of land everywhere within those three markets having been bid up by amounts that at least equal typical household income. Finally, we show that our zoning tax estimates are strongly positively correlated with a new measure of local housing market supply constraint (the Wharton Residential Land Use Regulatory Index of 2018). This relationship is not mechanically driven as the regulatory index is constructed from survey data that do not incorporate land or house price data in any way.

Suggested Citation

  • Gyourko, Joe & Krimmel, Jacob, 2021. "The impact of local residential land use restrictions on land values across and within single family housing markets," Journal of Urban Economics, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:juecon:v:126:y:2021:i:c:s0094119021000565
    DOI: 10.1016/j.jue.2021.103374
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    Cited by:

    1. Dan Ben-Moshe & David Genesove, 2022. "Regulation and Frontier Housing Supply," Papers 2208.01969, arXiv.org, revised Sep 2022.
    2. Guillaume Chapelle & J.B. Eyméoud & C. Wolf, 2023. "Land-use regulation and housing supply elasticity: evidence from France," THEMA Working Papers 2023-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    3. Albouy, David & Shin, Minchul, 2022. "A statistical learning approach to land valuation: Optimizing the use of external information," Journal of Housing Economics, Elsevier, vol. 58(PA).
    4. Furth, Salim, 2021. "Foundations and Microfoundations: Building Houses on Regulated Land," Working Papers 10752, George Mason University, Mercatus Center.
    5. Lozano Navarro, Francisco-Javier & Idrovo Aguirre, Byron, 2023. "Shocks regulatorios al mercado inmobiliario de Chile: ¿Cuánto del IVA a la vivienda se transfiere a precio de venta? [Regulatory shocks to housing market: How much of the Chilean VAT on housing sal," MPRA Paper 120017, University Library of Munich, Germany.
    6. Colin Doran & Thomas Stratmann, 2021. "The effects of neighboring parties on the value of rights: Evidence from timber harvests," Southern Economic Journal, John Wiley & Sons, vol. 88(2), pages 705-756, October.

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    More about this item

    Keywords

    Land prices; Land use regulation; Housing markets;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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