Well-Intentioned Regulations Can Backfire

Land use regulations including zoning laws, density restrictions, minimum lot sizes, height limits, rules on parking spaces and growth controls increase the cost of housing and limit its construction. 

That matters if the U.S. housing supply is 4.7 million homes short of demand. It’s just basic supply and demand economics. 

And focusing on supply matters. Such regulations often limit the amount, type, and location of new housing development, effectively constraining supply even as population growth, urbanization, and economic demand for housing rise. 

 This supply shortage pushes up prices and rents, making housing less affordable, particularly for low- and middle-income households. 

 For instance, regulations can impose lengthy permitting processes, environmental reviews, or inclusionary requirements that raise development costs, which are then passed on to buyers or renters. 

 But the bigger problem is simply that such rules are among the reasons more housing is not created. And there are several reasons, one might argue. Labor availability and costs; lumber availability and cost; tax rules and other government policies play a role. 

 

But land use planning rules matter. To be sure, the rationale often is compelling: preserving community character, protecting the environment, or preventing urban sprawl. 

 But those very same rules create disincentives to build affordable housing, as they all restrict housing density or volume. 

Study Title	Authors	Year	Methodology and Key Findings
The Effect of Land Use Regulation on Housing and Land Prices	Keith R. Ihlanfeldt	2007	Used an endogenous index of regulatory restrictiveness across over 100 Florida cities; found greater restrictiveness increases house prices, decreases land prices, and leads to larger new homes.
The Effects of Land Use Regulation on the Price of Housing: What Do We Know? What Can We Learn?	John M. Quigley and Larry A. Rosenthal	2005	Reviewed empirical literature using surveys, econometric models (e.g., OLS, hedonic pricing), and regulatory indices; regulations like zoning and growth boundaries are associated with higher prices, but causality is not firmly established due to endogeneity and data limitations.
https://www.urban.org/research/publication/land-use-reforms-and-housing-costs	Christina Plerhoples Stacy et al.	2023	Analyzed a panel dataset of 180 reforms in 1,136 U.S. cities (2000–2019) using machine learning, manual coding, and fixed-effects models; loosening restrictions increases supply by 0.8% over 3–9 years (mainly high-end units), while tightening raises median rents and reduces affordable units.
How Land-Use Regulation Undermines Affordable Housing	Sanford Ikeda and Emily Washington	2015	Reviewed literature and urban policy data; regulations reduce supply relative to free-market levels, increase costs (e.g., 10%+ "regulatory tax" in major cities), and disproportionately affect low-income households, potentially lowering GDP by limiting growth in productive areas.
Regulation and Housing Supply	Joseph Gyourko and Raven Molloy	2014	Literature review with surveys, panel data, and regression analyses (e.g., OLS, instrumental variables); strong positive link between regulation and prices (17–22% increases), reduced construction (4–22%), and lower supply elasticity, leading to volatility.
Zoning, Land-Use Planning, and Housing Affordability	Randal O'Toole	2017	Regression analysis of court decisions as proxies for regulation intensity (2000–2010 data); rising land-use and zoning regulations correlate with higher home prices in 44 and 36 states, respectively, with federal aid flowing more to restrictive states.
The Impact of Zoning on Housing Affordability	Edward L. Glaeser and Joseph Gyourko	2002	Compared house prices to construction costs across U.S. markets; zoning drives prices above costs in high-regulation areas (e.g., NYC, California), suggesting supply restrictions exacerbate affordability issues more than demand alone.
Do Restrictive Land Use Regulations Make Housing More Expensive Everywhere?	John Landis and Vincent J. Reina	2021	Examined 336 metro areas with multiple stringency measures and growth variables; restrictive regulations pervasively raise home values and rents, especially in growing/prosperous economies, but effects on supply vary by market.