Mastering the metropolis through research and thought leadership.
Working Papers

The Impact of Building Restrictions on Housing Affordability

Working paper #442
Edward L. Glaeser and Joseph Gyourko

Most parts of the United States are not facing a widespread crisis in housing affordability. House prices approximate the cost of construction, and in some regions, they are below physical construction costs. We identify a limited set of markets, especially in New York City and California, where housing prices diverge substantially from new construction costs. The evidence suggests that zoning and other land-use controls are responsible for abnormally high prices in these places, as there are other parts of the country experiencing high demand without high and growing prices. Policy advocates interested in reducing housing costs should examine local regulations because reducing the implied zoning tax on new construction could have large effects on housing prices. Perhaps the impact of the regulatory tax on housing prices is local regulation’s strongest political appeal. Weaker rules could cause property values to fall, hardly the ideal platform for political aspirants. If reforms are to be politically feasible, losers from reductions of regulatory burdens on hous-ing development will have to be compensated.

Download full paper · 1MB PDF


In This Section
Explore Topics

1010 Affordable Housing Amazon Amenitization Architecture Artificial Intelligence Asia Australia automation Autonomous Vehicles bonds Borrowing Constraints Brexit California Canada Capital Business China Co-Working Environment coastal markets cold storage Colombia Commercial Brokerage Commercial Real Estate commissions Congestion consumer bias covid-19 CRE credit card market Credit Default Swaps Credit Insurance Credit Risk Transfers Culture Data Analytics data centers Data Collection Technology Debt Market Demand Demographics Density Development Discrete Choice disruption Diversity drones e-Commerce Economic Corridors economic policy economics education election studies Equity Funds Equity Market Ethnic Factors Europe Fannie Mae financial asset management Foreclosures Foreign Policy France Freddie Mac general equilibrium Global global economy Global Financial Crisis Globalization great depression Great Recession healthy buildings Hedonic hospitality Housing & Residential housing boom Housing Disease housing prices Housing Supply Identity Income Inequality India inflation Inter-generational mobility interest rates Investing jobs labor market Lagging Regions land use regulation Language life sciences Macroeconomics malls Market Pricing megacities Microeconomics Migration Minimum Payments Mixed-Use Mobility moral hazard mortgage insurance mortgage market Mortgage Rates Mortgages Multi-family Nation Building Non-Traditional Mortgages Office Market office sector pension funds Placed Based Policies Political Risk Price Discovery Private Equity Business public health public policy Public Schools real estate brokerage Real Estate Investment Real Estate Investment Trusts Recession Rental Retail Retirement reverse mortgages Risk Adjustment risk management risk-shifting robotics single family housing Slums Sorting South America Spatial Regions spillover effect stimulus package Sub-Prime Mortgages Sustainability Technology telecommunications trade transportation unemployment United States Urban Urbanization Warehouse welfare work from home

arrow_drop_up