Study Finds Housing Regulations Prohibitive
Developing affordable housing policy that works isn't easy.
Different cities and states have vastly different approaches.
Some of the work, others don't.
Not only do the types of regulations vary dramatically, but does the amount.
Some jurisdictions have chosen to keep a tight control on housing regulation, to ensure that a certain percentage of housing stock remains affordable to low-income families without sacrificing quality construction.
Others have left the housing industry largely untouched, placing few demands and trusting the industry will not only do what's best for itself, but for city and county residents.
Regardless of the approach taken by cities, counties, and states, most agree that some amount of regulation is needed.
Until recently, the debate over just how much regulation is helpful and when it becomes detrimental went unanswered, but a new study provides some interesting insight.
The 8th annual Demographia International Housing Affordability Survey, released earlier this year, provides a snapshot of current housing markets.
The survey reviews hundreds of housing markets around the world and assigns them an "affordability" rating based on a ratio of housing costs to median income.
In addition, it studies housing regulations and their effect on development.
The Demograhica team found an interesting correlation between strict housing regulations and increased housing costs.
Strict land use laws make land acquisition more expensive, which translates to higher construction costs and a need for developers to set higher housing prices in order to turn a profit.
In addition, it creates a scarcity of housing, which drives up prices on existing homes and rental units.
Because housing regulations in the United States are so varied, the study was unable to pinpoint the threshold at which regulations begin to make housing prices prohibitive.
However, it did find a nearly across-the-board correlation between land use restrictions and higher housing prices.
A review of studies dating back 25 years found a correlation between restrictive housing regulations and "nearly 87 percent of house price increases.
" It is interesting to note that the correlation discovered was between housing prices and land use regulation, as opposed to other types of regulation related to things like construction.
This simple bit of information provides a starting point for both communities and housing developers that struggle to build single-family and for-rent properties at below-market rates.
It is possible that relaxing density restrictions and zoning laws could help keep housing prices lower.
Though regulations serve a purpose, the Demographia study highlights the importance of finding the right balance between land use restrictions and the development of affordable housing.
Different cities and states have vastly different approaches.
Some of the work, others don't.
Not only do the types of regulations vary dramatically, but does the amount.
Some jurisdictions have chosen to keep a tight control on housing regulation, to ensure that a certain percentage of housing stock remains affordable to low-income families without sacrificing quality construction.
Others have left the housing industry largely untouched, placing few demands and trusting the industry will not only do what's best for itself, but for city and county residents.
Regardless of the approach taken by cities, counties, and states, most agree that some amount of regulation is needed.
Until recently, the debate over just how much regulation is helpful and when it becomes detrimental went unanswered, but a new study provides some interesting insight.
The 8th annual Demographia International Housing Affordability Survey, released earlier this year, provides a snapshot of current housing markets.
The survey reviews hundreds of housing markets around the world and assigns them an "affordability" rating based on a ratio of housing costs to median income.
In addition, it studies housing regulations and their effect on development.
The Demograhica team found an interesting correlation between strict housing regulations and increased housing costs.
Strict land use laws make land acquisition more expensive, which translates to higher construction costs and a need for developers to set higher housing prices in order to turn a profit.
In addition, it creates a scarcity of housing, which drives up prices on existing homes and rental units.
Because housing regulations in the United States are so varied, the study was unable to pinpoint the threshold at which regulations begin to make housing prices prohibitive.
However, it did find a nearly across-the-board correlation between land use restrictions and higher housing prices.
A review of studies dating back 25 years found a correlation between restrictive housing regulations and "nearly 87 percent of house price increases.
" It is interesting to note that the correlation discovered was between housing prices and land use regulation, as opposed to other types of regulation related to things like construction.
This simple bit of information provides a starting point for both communities and housing developers that struggle to build single-family and for-rent properties at below-market rates.
It is possible that relaxing density restrictions and zoning laws could help keep housing prices lower.
Though regulations serve a purpose, the Demographia study highlights the importance of finding the right balance between land use restrictions and the development of affordable housing.
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