                         |
 | |||||||
Research Focus
Land Use Regulation and New Construction
This paper estimates the impact of land use regulation on residential construction. Regulation adds explicit costs, uncertainty, and delay to the development process. The effects on new construction vary by type of regulation. Overall, data from 44 metropolitan areas between 1985-1996 demonstrate that land use regulation lowers the level of steady state new construction. As regulation lengthens the development process, short- and long-run effects of demand schocks will vary relative to conditions in markets without such delays. Hence, regulation also affects the real estate cycle.
|
