The Influence of Regulation on Residential Land Prices in United States Metropolitan Areas

Robert W. Wassmer
Joshua A. Williams
California State University, Sacramento

The authors measure how a one-unit change in the Wharton Residential Land Use Regulatory Index of overall regulatory strictness and its specific component categories raises the price of land available for new residential construction in United States metropolitan areas. This information is essential to assess the validity of claims that additional constraints on a local government’s ability to impose restrictive residential land use regulations offer a means to generate more equitable and efficient outcomes in U.S. housing markets. The authors find that various measures of the stringency of local land use controls relevant to the development of residential projects do exert measurable positive influences on the average price of an acre of land available for single-family housing and thereby the price of such housing. A decrease in this regulatory stringency by one unit (or about 1 to 1.5 standard deviations from the variation observed in all metropolitan areas) could cut the price of new residential homes by about onefourth of the standard deviation observed in residential land prices across the United States.