Making housing affordable? The local effects of relaxing land-use regulation

Simon Büchler and Elena Lutz

Journal of Urban Economics, 2024, vol. 143, issue C

Abstract: This paper examines the effects of relaxing land-use regulations on housing supply and rents at the local intra-city level. We apply a staggered difference-in-difference model, exploiting exogenous differences in the treatment timing of zoning plan reforms as identifying variation. Increasing the allowable floor-to-area ratio (FAR), i.e., upzoning, significantly increases the living space and housing units by approximately 9% in the subsequent five to ten years. This effect is stronger for larger upzonings, for rasters where zoning is binding, and where rents are high. Furthermore, upzoning leads to no difference in hedonic rents between upzoned and later-upzoned rasters. These results show that upzoning is a viable policy for increasing housing affordability. However, the effects depend on the upzoning policy design and take several years to materialize.

Keywords: Affordability; Zoning; Densification; Housing supply; Rents (search for similar items in EconPapers)
JEL-codes: H7 H73 R1 R38 R52 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:143:y:2024:i:c:s0094119024000597

DOI: 10.1016/j.jue.2024.103689

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