Density Control, Home Price Appreciation, and Rental Growth in the United States

Michael LaCour-Little
Weifeng Wu
Fannie Mae

This article examines density control in the top 50 U.S. metropolitan areas using National Longitudinal Land Use Survey (NLLUS) data from 1994, 2003, and 2019. Small- and low-density jurisdictions have typically tightened density controls over this period, while large and populous places have loosened them, accommodating high-density development. Linking these changes to the house price appreciation, we find that greater price appreciation is positively correlated with the relaxing of the density regulation, on the surface a counterintuitive negative relationship. However, in the multifamily sector, we find that the relationship between density control and rent growth is positive: rents are rising faster in areas with tight density controls, consistent with supply constraints. Results also hold in cross-metropolitan area comparisons concerning house appreciation. The different impacts on home prices and the rental sectors may be due to civic engagement differences between homeowners and renters.