Impact of Urban Growth Boundary on Housing and Land Prices: Evidence from King County, Washington

Abstract

This study provides evidence of the impact of an urban growth boundary (UGB) on housing and land prices. The study uses a data-set that inventories sales transactions of single-family homes and of vacant lots zoned for single-family homes within two miles of either side of the eastern boundary of the primary UGB in King County, Washington. The results show that although the UGB increases land prices by 230 per cent, it decreases housing prices by 1.3 per cent. These findings should encourage policy-makers to adopt a policy framework in which a UGB's anticipated inflationary land price effect is mitigated by policies that increase housing supply. Such policies could include minimum density requirements, zoning for multifamily housing, and ordinances enabling the construction of accessory dwelling units.

Keywords::

• Housing affordability
• housing economics
• planning
• urban growth boundary
• hedonic regression
• spatial econometrics
• housing prices
• land prices

Notes

¹ See Revised Code of Washington, RCW, 36.70A.040 at http://apps.leg.wa.gov/RCW/default.aspx?cite = 36.70A.040, for a detailed description of the criteria.

² In this data-set, the large lots are minimum 1-acre lots and the medium-sized lots range from approximately one-half to 1 acre in size.

³ I thank an anonymous referee for offering this explanation.

⁴ I thank an anonymous referee for offering this potential explanation.

⁵ I thank an anonymous referee for suggesting this impact of the UGB.

⁶ I thank an anonymous referee for providing this suggestion.