Three Essays on Land Use Regulations and Urban Outcomes

Abstract

Local zoning and other land use regulations restrict the quantity of housing that can be built in the United States and the type and location of real estate development that is permitted. Land use regulations particularly limit relatively low-cost, multifamily development, leading to inflated housing costs and reduced population density and walkability. This dissertation explores the effect of land use regulations on housing market outcomes. I use both empirical and case study approaches to study housing markets and the effects of land use regulations. This dissertation consists of three chapters. Chapter 1, coauthored with Eli Dourado, builds on the existing literature on the relationship between walkability and house prices. We demonstrate a positive relationship between home prices and walkability using zip code–level data in the first nationwide study of walkability. We find that a one-point increase in Walk Score commands a 0.14 percent price premium. In other words, a zip code with a Walk Score of 100 could be expected to command a 14 percent premium relative to an otherwise comparable zip code with a Walk Score of 0. Our findings indicate that land use regulations that prevent walkable development—such as zoning, parking requirements, and density restrictions—make consumers worse off by restricting choice and the supply of walkable neighborhoods that consumers are willing to pay a premium for. Chapter 2 examines the effects of inclusionary zoning, a popular tool designed to increase the availability of affordable housing for households making less than their region’s median income, on housing supply and median house prices. When inclusionary zoning requires private developers to subsidize below-market- rate units, it may act as a tax on housing, leading to reduced supply and higher prices than cities would experience without the policy. Few empirical studies have attempted to measure how inclusionary zoning affects housing supply and prices. In this chapter, I use a new dataset on inclusionary zoning in the Baltimore- Washington region to estimate its effects on market-rate house prices and building permits in a difference-indifference study. I find some evidence that inclusionary zoning increases market-rate house prices, but none that it reduces new housing supply. Additionally, I find that most optional programs that offer developers increased development rights if they choose to provide below-market-rate housing units have been unsuccessful in producing affordable units. Alexandria, Virginia, and Falls Church, Virginia, are exceptions, where density bonuses are very valuable owing to traditional zoning’s restrictions on new housing construction. Chapter 3 examines how policymakers in one suburban jurisdiction changed zoning policy to allow new multifamily housing construction. Following the allocation of funds for a new line on the Washington Metropolitan Area Transit Authority’s Metrorail system, the Board of Supervisors in Fairfax County, VA undertook redevelopment planning for its Tysons area. The redevelopment plan was the first of its kind. The Board adopted a comprehensive plan that established the objective of transforming Tysons from highway-oriented suburban office park development into a walkable, mixed-use area. The redevelopment effort has received extensive attention for its goal to turn a highly car-oriented area into walkable, transit- oriented development. But what’s perhaps more notable about the Tysons redevelopment planning effort is its objective to allow extensive multifamily housing construction in a wealthy suburban community. So far, more progress has been made toward the goal of housing construction than walkability.