Land Regulation and the Price of New Housing Lessons from Three California Cities

Abstract

This article suggests that the effects of local land use controls on new home prices are greatest when such controls function as barriers to the entry of outside home-building firms. Housing markets in which developable land supplies are restricted are likely to be dominated by a small set of homebuilders who can exercise monopoly power over prices and products. In proposing land use controls, local planners should realize that the measure they use for gauging an area's development potential—the absolute availability of developable land—is not necessarily the measure used by developers and homebuilders.