Regulations and Housing Development: What We Know and What We Need to Know, paper prepared for the U.S. Department of Housing and Urban Development’s Conference on Regulatory Barriers to Affordable Housing

Informed public debate concerning the issue of regulatory barriers to housing development is impeded both by the lack of precision concerning the concept of “regulatory barriers ” and the absence of sophisticated research on the impact of regulations on the supply and cost of housing. Existing research suggests that a wide range of federal, state, and local regulations, including building codes, environmental laws, land use regulations, impact fees, as well as the government procedures to administer these regulations, reduce the supply of housing and generate substantial costs. Nevertheless, not all of these regulations can fairly be condemned as “barriers. ” To the contrary, some costly regulations can be justified because they are necessary to promote public health or safety. Others increase price because they generate amenities and, thereby, increase the demand for housing. However, many forms of federal, state, and local regulation are neither necessary nor efficient. Others may be efficient, but, nonetheless, generate unacceptable affordability problems for low- and moderate- income households. Existing research on the effects of government regulation on the supply and cost of housing is insufficient to guide public policy. Current studies either ignore entire categories of relevant rules or employ methodologies that are not well designed to separate out the independent effect