The impact of land use regulation across the conditional distribution of home prices: an application of quantile regress
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The impact of land use regulation across the conditional distribution of home prices: an application of quantile regression for group‑level treatments Tammy Leonard1 · Xi Yang2 · Lei Zhang3 Received: 12 December 2019 / Accepted: 4 November 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract By increasing housing prices, land use regulations can have positive impacts among homeowners, but they can also have negative impacts on the availability of affordable housing. We examined heterogeneity in the price impacts of land use regulation across the conditional house price distribution; this heterogeneity may ameliorate or exacerbate the impacts of land use regulation on affordable housing. Our results suggest that the distribution of price impacts across the conditional house price distribution is relatively uniform. Results suggest that land use regulations both constrain housing supply and induce within housing market migration that spreads price impacts throughout the region. JEL Classification R52 · R31
1 Introduction Land use regulations are often enacted by local governments in order to restrict the type and amount of built environment changes. These regulations alongside geographic constraints (i.e., bodies of water, mountainous terrain, etc.) are key factors that explain variation in residential housing supply elasticities (Saiz 2010). * Tammy Leonard [email protected] Xi Yang [email protected] Lei Zhang [email protected] 1
Economics Department, University of Dallas, 1845 E. Northgate Dr., Irving, TX 75062, USA
2
Economics Department, University of North Texas, Denton, TX, USA
3
Agribusiness and Applied Economics Department, Challey Institute for Global Innovation & Growth, North Dakota State University, Fargo, ND, USA
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Constraints on housing supply generally lead to higher residential house prices over time (e.g., Huang and Tang 2012; Ihlanfeldt and Mayock 2009; Paciorek 2013; Quigley and Raphael 2005; Saiz 2010). The impacts of the housing price increase are not uniform among households. Some homeowners have benefited from land use regulation through housing price appreciation; however, housing supply constraints can also limit the amount of affordable housing available in the community and drive up living costs (Quigley et al. 2009). Land use regulations thus may distort the household’s housing and location choices. Considering living costs that usually account for a greater proportion of household spending among lower-income households, this negative impact could be particularly stronger among low-income households. More importantly, by distorting household housing and location choices, land use regulation can drive inefficiencies in both housing and labor markets and hamper economic growth. In particular, land use regulations have been associated with divergent migration trends among high- and low-skilled workers (Ganong and Shoag 2017), providing empirical evidence for the imbalance in the benefits of land use regulation
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