IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v41y2011i6p571-583.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016604621100072X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.regsciurbeco.2011.06.002?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
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joshua D. Angrist & Jörn-Steffen Pischke, 2010. "The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 3-30, Spring.
    2. Case, Karl E. & Mayer, Christopher J., 1996. "Housing price dynamics within a metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 387-407, June.
    3. Fischel, William A., 1980. "Zoning and the exercise of monopoly power: A reevaluation," Journal of Urban Economics, Elsevier, vol. 8(3), pages 283-293, November.
    4. Glaeser, Edward L. & Ward, Bryce A., 2009. "The causes and consequences of land use regulation: Evidence from Greater Boston," Journal of Urban Economics, Elsevier, vol. 65(3), pages 265-278, May.
    5. Zeileis, Achim & Kleiber, Christian & Kramer, Walter & Hornik, Kurt, 2003. "Testing and dating of structural changes in practice," Computational Statistics & Data Analysis, Elsevier, vol. 44(1-2), pages 109-123, October.
    6. Sieg, Holger & Smith, V. Kerry & Banzhaf, H. Spencer & Walsh, Randy, 2002. "Interjurisdictional housing prices in locational equilibrium," Journal of Urban Economics, Elsevier, vol. 52(1), pages 131-153, July.
    7. Keith R. Ihlanfeldt, 2004. "Introduction: Exclusionary Land-use Regulations," Urban Studies, Urban Studies Journal Limited, vol. 41(2), pages 255-259, February.
    8. Edward L. Glaeser & Joseph Gyourko, "undated". "The Impact of Zoning on Housing Affordability," Zell/Lurie Center Working Papers 395, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    9. Wheaton William C., 1993. "Land Capitalization, Tiebout Mobility, and the Role of Zoning Regulations," Journal of Urban Economics, Elsevier, vol. 34(2), pages 102-117, September.
    10. J.M. Pogodzinski & Tim R. Sass, 1991. "Measuring the Effects of Municipal Zoning Regulations: A Survey," Urban Studies, Urban Studies Journal Limited, vol. 28(4), pages 597-621, August.
    11. Lynn M. Fisher & Henry O. Pollakowski & Jeffrey Zabel, 2009. "Amenity‐Based Housing Affordability Indexes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(4), pages 705-746, December.
    12. Stephen Malpezzi, 1994. "Housing Prices, Externalities, and Regulation in U.S. Metropolitan Areas," Wisconsin-Madison CULER working papers 94-08, University of Wisconsin Center for Urban Land Economic Research.
    13. James A. Thorson, 1996. "An Examination of the Monopoly Zoning Hypothesis," Land Economics, University of Wisconsin Press, vol. 72(1), pages 43-55.
    14. Saks, Raven E., 2008. "Job creation and housing construction: Constraints on metropolitan area employment growth," Journal of Urban Economics, Elsevier, vol. 64(1), pages 178-195, July.
    15. Green, Richard K., 1999. "Land Use Regulation and the Price of Housing in a Suburban Wisconsin County," Journal of Housing Economics, Elsevier, vol. 8(2), pages 144-159, June.
    16. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    17. Quigley, John M. & Rosenthal, Larry A., 2005. "The Effects of Land-Use Regulation on the Price of Housing: What Do We Know? What Can We Learn?," Berkeley Program on Housing and Urban Policy, Working Paper Series qt90m9g90w, Berkeley Program on Housing and Urban Policy.
    18. Katz, Lawrence & Rosen, Kenneth T, 1987. "The Interjurisdictional Effects of Growth Controls on Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 149-160, April.
    19. Thorson, James A., 1997. "The Effect of Zoning on Housing Construction," Journal of Housing Economics, Elsevier, vol. 6(1), pages 81-91, March.
    20. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    21. Henry O. Pollakowski & Susan M. Wachter, 1990. "The Effects of Land-Use Constraints on Housing Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 315-324.
    22. 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.
    23. Kopits, Elizabeth & McConnell, Virginia & Miles, Daniel, 2009. "Lot Size, Zoning, and Household Preferences: Impediments to Smart Growth?," RFF Working Paper Series dp-09-15, Resources for the Future.
    24. Ihlanfeldt, Keith R., 2007. "The effect of land use regulation on housing and land prices," Journal of Urban Economics, Elsevier, vol. 61(3), pages 420-435, May.
    25. 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.
    26. Daniel P. McMillen & John F. McDonald, 2002. "Land Values In A Newly Zoned City," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 62-72, February.
    27. Bruce W. Hamilton, 1975. "Zoning and Property Taxation in a System of Local Governments," Urban Studies, Urban Studies Journal Limited, vol. 12(2), pages 205-211, June.
    28. Hamilton, Bruce W., 1978. "Zoning and the exercise of monopoly power," Journal of Urban Economics, Elsevier, vol. 5(1), pages 116-130, January.
    29. Karl E. Case & Christopher J. Mayer, 1995. "The housing cycle in Eastern Massachusetts: variations among cities and towns," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 24-40.
    30. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    31. 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.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    3. H. Spencer Banzhaf & Kyle Mangum, 2019. "Capitalization as a Two-Part Tariff: The Role of Zoning," NBER Working Papers 25699, National Bureau of Economic Research, Inc.
    4. 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.
    5. Xi Yang, 2021. "Land-Use Regulations and Urban Growth of African Americans," Economic Development Quarterly, , vol. 35(4), pages 338-350, November.
    6. Keith R. Ihlanfeldt, 2004. "Exclusionary Land-use Regulations within Suburban Communities: A Review of the Evidence and Policy Prescriptions," Urban Studies, Urban Studies Journal Limited, vol. 41(2), pages 261-283, February.
    7. Tammy Leonard & Xi Yang & Lei Zhang, 2021. "The impact of land use regulation across the conditional distribution of home prices: an application of quantile regression for group-level treatments," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(3), pages 655-676, June.
    8. Shertzer, Allison & Twinam, Tate & Walsh, Randall P., 2018. "Zoning and the economic geography of cities," Journal of Urban Economics, Elsevier, vol. 105(C), pages 20-39.
    9. 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.
    10. 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).
    11. Raven S. Molloy & Charles G. Nathanson & Andrew D. Paciorek, 2020. "Housing Supply and Affordability: Evidence from Rents, Housing Consumption and Household Location," Finance and Economics Discussion Series 2020-044, Board of Governors of the Federal Reserve System (U.S.).
    12. 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).
    13. Monkkonen, Paavo & Manville, Michael & Lens, Michael, 2024. "Built out cities? A new approach to measuring land use regulation," Journal of Housing Economics, Elsevier, vol. 63(C).
    14. Gottlieb, Paul D. & O’Donnell, Anthony & Rudel, Thomas & O’Neill, Karen & McDermott, Melanie, 2012. "Determinants of local housing growth in a multi-jurisdictional region, along with a test for nonmarket zoning," Journal of Housing Economics, Elsevier, vol. 21(4), pages 296-309.
    15. Koster, Hans R.A. & van Ommeren, Jos & Rietveld, Piet, 2012. "Bombs, boundaries and buildings," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 631-641.
    16. 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.
    17. Zhang, Junfu, 2023. "JUE Insight: Measuring the Stringency of Land Use Regulation Using a Shadow Price Approach," Journal of Urban Economics, Elsevier, vol. 133(C).
    18. Guillaume POUYANNE & Frederic GASCHET, 2013. "The Effect Of Current And Future Land Use On House Prices," ERSA conference papers ersa13p249, European Regional Science Association.
    19. Molloy, Raven, 2020. "The effect of housing supply regulation on housing affordability: A review," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    20. Kahn, Matthew E. & Vaughn, Ryan & Zasloff, Jonathan, 2010. "The housing market effects of discrete land use regulations: Evidence from the California coastal boundary zone," Journal of Housing Economics, Elsevier, vol. 19(4), pages 269-279, December.

    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

    Statistics

    Access and download statistics

    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:eee:regeco:v:41:y:2011:i:6:p:571-583. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    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.