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Development Regulations and Housing Affordability

Working paper #659
John Crosland, Jr.

The most effective way to reduce the cost of all housing is to reduce the cost of development. In recent years development costs have skyrocketed due in no small part to the proliferation of new regulations. Unfortunately, in far too many cases the perceived benefits of these regulations do not justify their impact on housing affordability. This article examines this issue by describing the effect of land-use regulations, Urban Street Design Guidelines (USDG) and the Post Construction Controls Ordinance (PCCO) in Charlotte, North Carolina. Such regulations can increase the cost of developing a single-family lot by 35 percent and thereby increase the selling price of a single-family home from $120,000 to $170,000. The effect on rental housing is also discussed. The author also concludes that the effects of land-use regulations have an inordinately large impact on low-income homeowners and renters.

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