Connect with us

Hi, what are you looking for?

Joyful Retirement SecretsJoyful Retirement Secrets

Editor's Pick

Land-Use Regulations Make Housing Less Affordable

Jeffrey Miron and Jacob Winter

housing, build

US housing prices have risen faster than income since 2000, making housing less affordable. 

The solution is more housing, and the question is, what is holding that back? Recent research (Cato Research Brief no. 424) finds that land-use regulations have made construction firms less productive: 

The likelihood that a project is approved decreases as its size increases. Thus, regulation causes the average project size to shrink as entrepreneurs pursue a smaller project scale for a higher probability of receiving a permit .… As firm size shrinks, so do incentives to invest in technology. The overall productivity of the industry consequently declines. 

Indeed, the authors present evidence that: 

areas with stricter land-use regulations … have smaller and less productive construction firms. [Moving from] Atlanta’s [to] San Francisco’s regulatory strictness is associated with a 12 percent reduction in total revenue per firm and a one-third reduction in the share of employment in large firms. 

Ultimately, their findings reveal: 

much less residential and nonresidential construction activity in areas with stricter land-use regulations. 

This research adds to the growing evidence that relaxing land-use regulations is the most effective way to expand housing supply and increase affordability. For example, local governments should allow more multi-family developments.

This article appeared on Substack on March 15, 2025.

You May Also Like

Politics

Billionaire Elon Musk said Saturday that ‘the bar is very low’ after announcing that all federal employees must report their productivity if they wish...

Politics

Egypt has apparently released the initial details of a proposal Cairo has put together to rebuild the Gaza Strip within three to five years,...

Tech News

Illustration: The Verge Google said today that it plans to update Google Maps to reflect President Trump’s January 20th executive order to change the...

Tech News

Image: Sony Sony is upping the limited warranty on some InZone gaming monitors to three years and is tossing in OLED burn-in coverage for...