Land Use Regulation and Housing Affordability
Originally published in Regulation and Economic Opportunity
Emily Hamilton begins her treatment of land use regulation with an analysis of how such regulations affect housing affordability. Hamilton discusses how zoning and other land use regulations, such as minimum unit size or lot size requirements, have contributed to the elimination of many of the market innovations that can provide affordable housing options in cities with otherwise high land prices. Ultimately, the land use restrictions, largely supported by homeowners seeking to increase the value of their principal asset, have limited new housing construction and driven up housing prices and rents. Rent controls, introduced to combat some of the housing price effects of other regulations, have contributed to less housing and job mobility; rent-controlled properties often are repurposed (as condominiums or other owner-occupied dwellings) and sold at higher prices than rental housing not covered by such controls. However, as Hamilton discusses, some local and state efforts to liberalize land use regulations have shown promise.