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The effects of residential zoning in U.S. housing markets

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  • Song, Jaehee

Abstract

I construct a new nationwide dataset to measure the stringency of residential zoning in the United States and examine its effects on housing production, prices, and demographic sorting. First, I develop and implement a structural break detection algorithm to infer minimum lot size regulations. The dataset spans over 16,000 local jurisdictions within Core-Based Statistical Areas, capturing both cross-jurisdictional and within-jurisdictional variation in zoning stringency. I find that 18.5 percent of single-family home constructions bunch at the minimum lot size threshold, suggesting that these zoning requirements are binding for a substantial share of single-family development. Second, I estimate the effects of these regulations on housing market outcomes, exploiting variation across nearby zoning districts within municipal border regions. The results show that minimum lot size regulations increase home sizes, sales prices, and rents. Moreover, restrictive zoning disproportionately attracts high-income white homeowners, reinforcing patterns of residential segregation.

Suggested Citation

  • Song, Jaehee, 2025. "The effects of residential zoning in U.S. housing markets," Journal of Urban Economics, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:juecon:v:149:y:2025:i:c:s009411902500049x
    DOI: 10.1016/j.jue.2025.103784
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    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • K2 - Law and Economics - - Regulation and Business Law

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