Working Paper: NBER ID: w28993
Authors: Joseph Gyourko; Jacob Krimmel
Abstract: We provide estimates of the impact of restrictive residential land use environments on the price of land across major American housing markets. Using micro data on vacant land purchased to develop single family housing, we implement a new empirical strategy for estimating so-called ‘zoning taxes’ – the amount by which land prices are bid up due to supply side regulations. Our results are broadly consistent with previous findings that zoning taxes are especially burdensome in large coastal markets. However, our more recent data indicates that price impacts in the big west coast markets now are the largest in the nation. In the San Francisco, Los Angeles, and Seattle metropolitan areas, the price of land everywhere within those three markets having been bid up by amounts that at least equal typical household income. Finally, we show that our zoning tax estimates are strongly positively correlated with a new measure of local housing market supply constraint (the Wharton Residential Land Use Regulatory Index of 2018). This relationship is not mechanically driven as the regulatory index is constructed from survey data that do not incorporate land or house price data in any way.
Keywords: land use restrictions; housing market; zoning taxes; land values; housing affordability
JEL Codes: R14; R21; R31; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory strictness (K20) | land prices (R31) |
| more stringent regulations (G18) | higher land prices (R21) |
| regulatory restrictions (L51) | increased land prices (R52) |
| zoning taxes (R38) | land prices (R31) |
| Wharton Residential Land Use Regulatory Index (R52) | zoning taxes (R38) |