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The impact of minimum lot size regulations on house prices in Eastern Massachusetts

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  • Zabel, Jeffrey
  • Dalton, Maurice

Abstract

There has been an increased focus on zoning as a cause of high house prices in many metropolitan areas in the United States. But isolating the direct causal impact of zoning on house prices is difficult. This study overcomes the problems in the existing literature by investigating the effect of minimum lot size restrictions (MLRs) on house prices using data on transactions of single-family homes in the greater Boston area from 1987 to 2006. We estimate a model of house prices that include changes in minimum lot size at the zoning district level, variables that account for possible spillover effects in the same town and in nearby towns, and zoning district fixed effects. We estimate price effects due to MLR of 20% or more at the upper end of the impact distribution. We find evidence of significant spillover effects within towns that are similar to those in the zoning district in which the MLR changed. The impact on house prices in nearby towns is significant and as high as 5%. Finally, we find that the impact increases over time with effects as large as 40% occurring 10years after the change in MLR.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:regeco:v:41:y:2011:i:6:p:571-583
    DOI: 10.1016/j.regsciurbeco.2011.06.002
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    Cited by:

    1. Magliocca, Nicholas & McConnell, Virginia & Walls, Margaret & Safirova, Elena, 2012. "Zoning on the urban fringe: Results from a new approach to modeling land and housing markets," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 198-210.
    2. Jackson, Kristoffer, 2016. "Do land use regulations stifle residential development? Evidence from California cities," Journal of Urban Economics, Elsevier, vol. 91(C), pages 45-56.
    3. repec:eee:ecolet:v:164:y:2018:i:c:p:58-61 is not listed on IDEAS
    4. Gyourko, Joseph & Molloy, Raven, 2015. "Regulation and Housing Supply," Handbook of Regional and Urban Economics, Elsevier.
    5. Gallagher, Ryan M., 2016. "The fiscal externality of multifamily housing and its impact on the property tax: Evidence from cities and schools, 1980–2010," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 249-259.
    6. Peter Gordon, 2012. "Spontaneous Cities," Working Paper 8954, USC Lusk Center for Real Estate.
    7. Douglas J. Krupka & Kwame N. Donaldson, 2013. "Wages, Rents, And Heterogeneous Moving Costs," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 844-864, January.

    More about this item

    Keywords

    Land use regulations; Hedonic house price model;

    JEL classification:

    • 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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