Transcript Land Use Regulation in Greater Boston

Regulation and the Rise of
Housing Prices in Greater Boston
Presentation by
Edward Glaeser & Amy Dain
January 5, 2006
Top Five Metropolitan Areas By
Housing Price Appreciation
OFHEO Repeat Sales Price Indices
1980-2004, CPI Adjusted
•
•
•
•
•
Nassau-Suffolk (NY)
Boston Quincy (MA)
Cambridge-Newton (MA)
Essex County (MA)
Salinas (CA)
251%
210%
180%
179%
162%
Rising Housing Prices Mean Rising
Demand, But High Demand
Doesn’t Have to Mean High Prices
In Houston, Las Vegas and Phoenix
NAR median sales prices were under
$200,000 last year.
Boston’s NAR median sales price was
$418,000.
But there were 45,000 in permits in
Houston last year and 32,000 in
Vegas as opposed to 8,200 in Boston.
As Prices Rise, Permits Fall:
This Means a SUPPLY problem
35000
30000
20000
15000
10000
5000
Year
Boston-Quincy
Cambridge-Newton-Framingham
Essex Co.
Boston MSA
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
0
1961
Total Permits
25000
1
Two Views of Restricted Supply:
No Land vs. No Permits
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0
Log Housing Density 1980
Total Permits 1980-2002 per Acre
2
Fitted values
Examples of Low Density
and Low Production
• Lincoln, Weston, and Concord together
include more than 61 square miles or 39,000
acres, and contain only 12,889 homes.
• Yet in these three places, which currently
have on average more than three acres per
home, there were a total of 1,746 singlefamily units permitted between 1980 and
2002.
• There are another 25 localities within our
sample with less than one home for every
two acres that allowed less than 600 new
units between 1980 and 2002.
What Does an Acre Cost?
• If land is just scarce, then land
should be as expensive if it
extends an existing lot or if it sits
under a new lot.
• But on average, an extra acre
costs only $16,600 in our sample.
• If an acre sits under a new home,
it’s worth $450,000.
• This difference is impossible
without regulation.
Municipalities
Studied
-Within 50 miles of Boston
-187 municipalities
-Over half of state’s 351 cities and towns
Regulations
Studied
Database: Answers to over 100
questions about regulations in
each municipality.
Sample: 187 municipalities
187 zoning bylaws/ordinances
181 subdivision regulations (road design standards)
131 wetlands bylaws/ordinances (over 2/3 of 187)
109 septic regulations (over 2/3 of 161 municipalities not 100% on sewer*)
*26 municipalities 100% on sewer.
Lot Size – Single
Family Lots
MassGIS data (from ’99, ’00)
2-acre lots zoned in over
90% of town’s area:
1.
2.
3.
4.
5.
6.
7.
Boxford
Carlisle
Lincoln
Medway
Berlin
Bolton
Dunstable
8.
9.
10.
11.
12.
13.
14.
Groton
Paxton
Plympton
Princeton
Rehoboth
Sutton
Townsend
Half of the municipalities (95 of 187) zone over 50%
of land area for one acre lot sizes or larger.
Frontage, setbacks, width, yard size…
Lot
Shape
“No pork chop, rattail, or excessively funnelshaped or otherwise gerrymandered lots
shall be allowed.” – Millbury Zoning Bylaw
Perimeter/area ratios:
2
(p /a)/(a/r)<=X, with X ranging from 20 to 30
-6 municipalities
2
p /a<=X, with X ranging from 22 to 45
-26 municipalities
p/a<=X, with X ranging from 0.02 to 0.08
Key
p = perimeter
a = actual lot area
r = required lot area
-7 municipalities
Other shape requirements: Fit circle, square, rectangle,
ellipsis within lot lines.
Cluster/Flexible Zoning
(Open Space Preservation Design, Conservation
Subdivision, PUD)
80% of municipalities have it.
Only scattered success.
Of ¾ of municipalities that told us
results of cluster zoning…
-18 said: built a lot of cluster
-16 said: no cluster built
-Most said: ‘not much, a few’
-Minimum parcel size too big
-Process risky and time consuming
Tyngsborough’s 2004 Master Plan recommends: “Eliminate requirement that
Town Meeting approve each Open Space Residential Development.”
-Not enough flexibility
-No additional units above conventional zoning plan
“No density bonus in ours. Why would you cluster?” – Town Planner
Multi-family Zoning
No MF allowed MF only if 55+
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Bolton
Boylston
Bridgewater
Dighton
Lakeville
Littleton
Mendon
Nahant
Seekonk
West Bridgewater
1.
2.
3.
4.
5.
6.
7.
8.
9.
Boxford
Carlisle
Lynnfield
Marshfield
Paxton
Plympton
Wenham
Hanover (townhouse only)
Medway (townhouse only)
“It may technically
say that you can
build multi-family,
but the bar is so
high that you
can’t build under
it.”
-Planner in town
south of Boston
Barriers to MF development where “allowed”:
1. Minimum parcel size
2. Dimensional requirements
3. Re-zoning often required; special permits also risky
4. MF district built-out
Example: Westborough has Garden Apartment and High Rise Apartment
Districts. Westborough’s Master Plan states: “Although these districts appear to
provide ample alternatives to single-family housing in the Town, in reality they do
not since virtually no land is zoned for multi-family housing.”
Accessory Apartments
In Owner-Occupied Single-Family Homes
Almost 60% of municipalities explicitly allow them
Most restricted to relatives of the owner
(“in-law apartments”)
Just over 1/4 of municipalities allow accessory
apartments with no occupancy restrictions
Due to the occupancy restrictions, many must be repermitted or re-certified on a regular basis
-When relatives move out, the kitchen must be removed and
apartment reintegrated
Subdivision Regulations
Road Width for New Neighborhoods
Most common: 24 - 28 feet of pavement.
37 require 30+ feet. (20% of sample)
20 require no more than 22 feet.
“You don’t want to
end up with a sea
of pavement.”
-Planner in community south
of Boston with 32-foot
pavement requirement
6 feet
8 feet
Wetlands Regs:
Land Subject to
Flooding
2/3 of municipalities have passed wetlands
bylaws/ordinances.
Wetlands Protection Act protects “isolated land subject
to flooding” – standing water, volume ¼ acre-foot, once
per year.
59 municipalities expand definition of flooding
11:
5:
Dover:
Hingham:
Gloucester:
Wrentham:
Taunton:
Wayland:
Swansea:
24:
1/8 acre-foot
2,000 sq.ft. (1/20th of acre)
1/6 acre-foot
1/16 acre-foot
1/43 acre-foot
3/43 acre-foot
1,000 sq.ft. surface area and 100 cubic feet volume
500 sq.ft. surface area
1,000 sq.ft. surface area that floods once every five years.
variations on “temporary inundation… that covers land not usually under water”
Many lack definitions of flooding altogether, even when
they indicate some increased protection for LSF.
Septic Regulations
109 municipalities have local septic regulations,
supplements to Title 5
Percolation rate
29 have stricter perc rate requirement than Title 5’s
“60 minutes/inch”
Maximum perc rate – 20 minutes per inch
1.
2.
3.
4.
5.
6.
Canton
Topsfield
Tewksbury
Westford
Sherborn
Ipswich
7. Berkley
8. Harvard
9. Mansfield
10. Marshfield
11. Lakeville
12. Bridgewater
The Impact of Regulation
on Housing: Lot Size
Distribution of SF minimum lot sizes
Pct of regional total
30.00
25.00
20.00
15.00
10.00
5.00
0.00
< 10
10-20
20-30
30-40
40-50
50-60
Lot size (000s of sf)
Towns
Population
Land
60-70
70+
Lot Size and
Housing Stock
• In 1970, each acre per lot is associated
with 41 percent less housing.
• In 2000, each acre per lot is associated
with 36 percent less housing.
• Controls for town area, housing stock in
1940, and a number of 1940 controls
(to avoid endogeneity).
• Can be interpreted as houses per acre
or housing growth 1940 – 1970 or
1940-2000.
Lot Size and Permits
• Each acre per lot is associated with 33
percent fewer permits 1980-2002
• 33 percent less permits in the 1980s and
41 percent less permits in the 1990s
• Controls for 1970 era characteristics
including housing stock, university
presence, percent college graduate
• Coefficients rise with 1940 controls (.5)
Individual Impacts of
Environmental and
Subdivision Regulations
Permitting drops:
• About 10 percent when localities
impose stricter than state standards
for wetlands
• About 4 percent when localities
impose stricter than state standards
for septic systems
• About 12 percent when they adopt
new subdivision regulations
• But none of these results are
statistically significant
Combined Impacts of
Environmental and
Subdivision Regulations
• Combine wetlands, septic, and
subdivision regulations into
one index
• Each additional form of
regulation is associated with a
10 percent reduction in
permitting
• The coefficient is statistically
significant
Cluster Zoning
and Permits
• Cluster zoning appears to increase
permits by 20 percent with town
controls.
• The cluster effect is 8.6 percent
with town fixed effects.
• Inclusionary zoning has a positive
effect with town controls, but a
negative effect with town fixed
effects.
• Some of these rules are actually
taxes on new development.
Zoning’s Impact
on Prices
• Zoning should increase prices
everywhere not just the affected
town because supply is restricted
in the whole region.
• Two towns that are otherwise
identical need to have identical
prices.
• If Saudi Arabia reduces its oil
production, it doesn’t raise the
price of Saudi Crude relative to
Venezuelan Crude.
Nonetheless,
We Look at Prices
• Basic effect on median sales price
with 1940 controls is each acre per lot
raises prices by 15.8 percent in 1987,
11.3 percent in 1995 and 19.5 percent
in 2001.
• Each acre per lot reduces the share of
affordable housing by 20 percent.
• With house characteristics, effect
drops to 13 percent, and disappears
once you control for 1970 density
level.
High Housing Prices Mean
Firms Must Pay High
Wages To Attract Workers
Adjusted Log Wage
.
3
2.8
2.6
2.4
11
12
Log of Housing Value
13
Policy Proposals Must
Address Four Features
• Localities have strong incentives to
restrict new development
• Localities have the ability and
incentives to subvert state-level
policies
• The current system has too much
uncertainty
• Property rights are diffuse and ill
defined
Four Policy Approaches
• Use big carrots and sticks
• Override local controls
• Reform the legal environment
• Replace some controls with fees
Summary
• Housing prices and land use
regulations are linked
• Minimum lot sizes have a
dramatic impact
• Local rules for wetlands, septic
systems, and subdivisions also
play an important role
• Effective responses require
significant state-level actions