The Hidden Cost of Bundled Parking View Larger Image

Document Type


Publication Date

Spring 4-1-2017


The University of California Transportation Center/The Regents of the University of California


Urban renters in the US face fast-rising housing prices, especially in coastal metropolitan areas. Price increases are in part due to restrictive land-use regulations. Minimum off-street parking requirements, a central component of land-use regulation in the US, warrant detailed study and policy reform. In most cities today, municipal regulation requires developers to provide on-site parking. Renters or buyers then pay for this parking as part of their monthly rent or purchase price; the price of parking is thus “bundled” with the price of the housing unit. While many households might have chosen to pay for on-site parking in a free market, this proportion is surely lower than what has been mandated. Moreover, the historical effect of minimums and bundled parking hides a transportation cost burden in housing prices, leaving households unable to choose. Minimum parking requirements force developers to build costly parking spaces that drive up the price of housing. Urban policymakers have recently taken an interest in reforming parking regulations and allowing unbundled parking based on social equity and environmental sustainability rationales.

In our research, we ask: What are the effects of parking provision on residential rents in America’s cities? We find that the cost of bundled garage parking for renters is approximately $1,700 per year, and the bundling of a garage space adds about 17 percent to a unit’s rent. There are about 708,000 households without a car who have a garage parking space. We estimate that these households’ payments for parking represent a direct deadweight loss to society (a measure of the large-scale inefficiency associated with minimum parking requirements) of approximately $440 million per year. We argue that this figure represents just the tip of the iceberg when considering the indirect cost of minimum parking requirements. We conclude by suggesting two types of local land-use regulatory changes to reduce the high cost burden of parking: (1) cities should reduce or eliminate minimum parking requirements, and (2) cities should allow or encourage developers and landlords to offer unbundled parking options.