Daily Court Reporter - News Report shows that stricter land regulations contribute to higher home prices
Report shows that stricter land regulations contribute to higher home prices
BRANDON KLEIN, Daily Reporter Staff Writer
With stricter land-use regulations, homeowners can expect higher home values and strong job growth, according to a new report.
And in Columbus, where regulations are moderate, the region's values have increased nearly 43 percent with employment increasing nearly 30 percent from 2010 to 2017, according to Zillow, an online real estate and rental marketplace company.
"As the housing market has recovered from the Great Recession and collapse in home values, a new challenge emerged that is driving market dynamics - the shortage of homes for potential buyers," stated Zillow Senior Economist Aaron Terrazas. "We've seen inventory falling on an annual basis for more than three years now. As a result of job and population growth, housing demand has overwhelmed the inventory of pre-existing homes and builders are facing a number of challenges in adding new supply, including regulatory costs."
He said that in hot job markets with some of the strictest laws about building new residential housing, "home values experience the most pressure. It's helped home values recover and exceed their previous highs, but leaves many home shoppers unable to break into the market."
The company used an index of land-use regulations from the Wharton School of the University of Pennsylvania to determine the level of strictness in regulations along with data from the U.S. Bureau of Labor Statistics and U.S. Census Bureau for job growth.
The report noted that, nationally, employment grew nearly 13 percent and home values increased nearly 20 percent from 2010 to 2017.
During the same period, home values increased 14 percentage points for every 10 percentage-point increase in jobs.
And markets with the most restrictive regulations had home values grew 25 percentage points for every 10 percentage-point increase in employment, according to the report.
In San Francisco, for example, the city had strict regulations but home values increased nearly 59 percent between 2010 and 2017, while employment grew more than 23 percent.
On the other hand, Indianapolis, a Midwestern city such as Columbus, regulations were among the least restrictive.
But employment increased nearly 16 percent, while home values increased more than 14 percent during the same period.
Aside from home values and employment, the Seattle-based company's report noted that growing job markets increases the demand for housing.
Therefore, markets with the most restrictive housing regulations have less housing compared with places with easier building laws.
Cities with stricter regulations increased their housing stock by 4.4 percent, while markets with loose regulations added 4.5 percent more homes, according to the report.
Columbus' housing stock increased 4.9 percent between 2010 and 2017 compared with 5.2 percent in Indianapolis during the same period.
Date Published: August 24, 2018