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Planning Regulations: Does Land Use Regulation Lower the Average Price of Housing in Cities?

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  • Anthony Yezer

    (George Washington University)

Abstract

A substantial empirical literature finds a positive partial relation between indexes of land use regulations and differences in the asset price of housing among cities. A complimentary theoretical literature concludes that this result arises because planning restricts laissez faire housing supply. The theoretical models use highly stylized characterizations of the effects of land use regulation. This paper provides, for the first time, a formal analysis of the theoretical effects of four stylized specifications of land use restrictions. The sign of the relation between regulation and the average price of housing in cities varies among the four alternatives. Furthermore, analysis of a realistic representation of planning demonstrates that regulation is likely to lower average housing price. Therefore, empirical evidence that housing prices vary directly with regulation could indicate positive amenity effects or benefits of planning and that higher housing prices justify added planning restrictions.

Suggested Citation

  • Anthony Yezer, 2024. "Planning Regulations: Does Land Use Regulation Lower the Average Price of Housing in Cities?," Working Papers 2024-03, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2024-03
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Housing price; land use regulation; standard urban model;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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