Essays on Zoning Regulations and Housing Markets
Date of Award
Doctor of Philosophy (PhD)
Zoning regulations restrict the type and quantity of housing constructed. Such regulations have recently come under scrutiny, with policymakers and advocates pushing for relaxed zoning. They argue relaxing zoning laws will lower housing costs and increase access to high-opportunity neighborhoods. In this dissertation, I evaluate the impacts of minimum lot area regulations, the most common type of zoning controls, in U.S. housing markets. I first construct a unique data set of neighborhood-level minimum lot area regulations covering 134 million single--family homes in 29,262 municipalities. Using this data, I evaluate the effects of minimum lot area regulations on housing density, prices, and the welfare of different socioeconomic groups by using a spatial discontinuity design and by estimating a novel microeconomic model of housing demand and housing supply. In the first chapter, I construct a nationwide data set on minimum lot area regulations by developing a scalable algorithm that detects structural breaks in the distribution of residential lot sizes. This data set is unique in its national coverage: zoning data is maintained by local jurisdictions and no other data set covers broad geographic areas. I document two key facts from this data. First, strict zoning regulations are pervasive across the U.S.: 40% of residential land is subject to minimum lot area requirement greater than or equal to 1 acre. Second, zoning regulations appear to distort the composition of housing characteristics, with a substantial number of residential lots bunching at the minimum lot area constraint. In the second chapter, I estimate the effects of minimum lot area regulations on housing market outcomes. In my analysis, I address the endogeneity concern that zoning stringency is correlated with unobserved location amenities by using a spatial discontinuity design. To do so, I compare residential properties near municipal borders where the regulation level changes. The results suggest that doubling the minimum lot area increases property values by 14% and rent by 6% and reduces housing density by 40%. In addition, higher minimum lot areas disproportionately attract white and wealthier homeowners. In the final chapter, I develop and estimate a model of housing demand and supply and use the framework to evaluate counterfactual statewide relaxation of minimum lot area regulations. In the model, households are allowed to have preferences for zoning stringency in their neighborhoods, and regulatory costs of construction are allowed to depend on both zoning and non-zoning supply restrictions. My model estimates suggest that white households have stronger preferences for strict zoning in their neighborhoods compared to racial minorities with similar income. Furthermore, I find that both zoning and non-zoning regulatory costs are substantial and vary significantly by municipality. The estimates imply that, for example, reducing minimum lot area statewide in Connecticut would cause new homes to be substantially smaller and cheaper, thus benefiting racial minorities.
Song, Jaehee, "Essays on Zoning Regulations and Housing Markets" (2022). Yale Graduate School of Arts and Sciences Dissertations. 524.