These Are The Most Highly Regulated Housing Markets

Houses in the Seattle area. A new study identifies the region that includes Seattle as one of the more heavily regulated housing markets in the U.S.

Houses in the Seattle area. A new study identifies the region that includes Seattle as one of the more heavily regulated housing markets in the U.S. Shutterstock

 

Connecting state and local government leaders

A new study finds that a number of coastal metropolitan areas have some of the most stringent guidelines for residential development.

Multi-layered approval processes, minimum lot size restrictions, open space requirements and fees charged on new development are just a few of the ways that local governments around the country hold sway over the housing that is built within their jurisdictions.

New academic research released in December attempts to gauge how restrictive these and other related regulations are in hundreds of places across the United States. The findings are based on survey results from about 2,400 communities and an index that measures “regulatory restrictiveness.”

When looking 44 metropolitan areas in which at least 10 communities responded to the survey, the researchers conclude that San Francisco and New York City are the most highly regulated housing markets in the country based on the index.

They also note that nine of the top 10 markets that were identified as having the most strict regulations are located on the east or west coasts. 

These places include regions that encompass an assortment of cities: Providence, Rhode Island; Seattle; Los Angeles and Long Beach, California; Riverside and San Bernardino, California; Washington, D.C.; Miami and Fort Lauderdale, Florida; and Portland, Oregon. Phoenix, located inland, also made the list.

While the statistical areas include large cities, they stretch beyond their boundaries, covering surrounding areas. The communities that participated in the survey are primarily suburban. 

The most highly regulated regions tend to have features like multiple entities charged with approving or vetoing projects, larger lot size requirements (which typically reduce the possibility of building denser housing), and longer project review times.

Among larger metropolitan areas, the more lightly regulated places tend to be in “declining” housing markets, such as in the “Rust Belt,” according to the paper. The researchers count places like Cleveland and Cincinnati in Ohio and Detroit and Grand Rapids, Michigan among this group.

Joseph Gyourko and Jacob Krimmel at the University of Pennsylvania and, Jonathan Hartley at Harvard University conducted the research.

Results from a previous survey conducted around 2006 provide a point of comparison for their 2018 results. But they found that the fundamentals of local, residential land use regulations didn’t change that much between those years in the places that responded to the survey.

Although the researchers do note that in a typical community, the number of approvals needed for projects that vary from standard zoning requirements is on the rise, making the process more cumbersome. Restrictions on density are also used more widely and are more severe on average than in 2006, their paper adds.

One other notable change is a clear drop in imposing “impact fees” on builders. These fees commonly go toward covering public infrastructure costs tied to new development.

The researchers say that on Jan. 15 they plan to release the underlying data they used for their study so others can use it. In the meantime, a copy of their working paper about the survey is available here, via the National Bureau of Economic Research.

Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.

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