What are the real constraints on housing production?
UCLA Ziman Center for Real Estate
There is clear evidence that regulations constrain housing production. We know less, however, about which zoning provisions matter most and why. I wanted to better understand the real world impact of zoning in Los Angeles. To do this I compared the characteristics of 32 new multifamily housing developments with baseline zoning requirements in two sets of Metro rail station areas: Vermont/Western and Koreatown. I then supplemented this building-scale analysis with expert interviews, including real estate developers and their planning consultants.
My two main findings are that (1) developers are sensitive to density limits and parking requirements, and (2) the implementation of regulations can be as important as the written regulations themselves. The average development in the Vermont/Western area had 112% of the baseline allowable residential density and 94% of the minimum required parking. Koreatown's average development had 99% of the baseline residential density and 88% of the required parking. But, developers responded differently to zoning requirements depending on the project's location and whether it was affordable or market-rate, apartment or condominium, and by development size.
Gabbe, C. J. (2018). What are the real constraints on housing production? UCLA Economic Letter. Los Angeles, CA: UCLA Ziman Center for Real Estate.