No Renters in My Suburban Backyard: Land Use Regulation and the Rental Housing Market in MA 

Publication Date: June 2007

Publisher: Furman Center for Real Estate

Author(s): Jenny Schuetz

Research Area: Social conditions

Keywords: housing prices; land use; renters; subsidized housing

Type: Working Paper

Abstract:

For several decades, academics and policymakers have argued that the ability of low- and moderate-income families to move into desirable suburban areas is constrained by the high cost of housing in those areas. Local zoning ordinances and other forms of land use regulation are believed to contribute to increased housing prices by reducing supply and increasing the size and quality of new housing. Restrictions on rental housing in particular are likely to reduce prospects of mobility for low- and moderate-income families. In this paper, I employ an instrumental variables approach to examine the effects of regulations on the quantity and price of rental housing in Massachusetts, using historical municipal characteristics to instrument for current regulations. Results suggest that communities with less restrictive zoning issue significantly more building permits for multifamily housing but do not have significantly lower rents. The lack of differences in rents across communities may reflect spillover effects and regional supply constraints. The analysis of rents may also be confounded by the thinness of the rental market and development of subsidized housing under the state’s affordable housing law.