Land Use Regulations and Housing Markets in Large Metropolitan Areas

This article examines the impacts of land use regulations on cross-metropolitan variations in housing prices, rents and housing starts. Based on a 2002 national survey of local jurisdictions' land use regulations, two indices of regulatory stringency are created: one measures the use of growth management tools and the other measures the impacts of development process administrative practices. The results show that the growth management tools index is positively associated with housing prices and rents. A positive relationship is also found between the growth management tools index and the number of starts of multiple-unit housing. Similarly, a positive relationship is seen between the development process index and metropolitan housing prices and rents. In addition, more restrictive development processes, as measured by the index, restrain housing starts under conditions of rapid population growth.