There’s something deeply wrong in many big cities’ housing markets. Prices are through the roof, but governments won’t let developers build more housing to accommodate soaring demand. Thanks to regulations, achieving homeownership is a struggle for the middle class, to say nothing of the poor, in several of the nation’s most economically vibrant places.
A new NBER working paper by economists Joseph Gyourko and Jacob Krimmel helps to quantify a big part of the problem: the “zoning tax” that regulations impose on land used for single-family housing. The paper provides concrete numbers for the cost of these regulations in 24 metropolitan areas, both overall and in relation to homes’ distance from the urban core.
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