Some of you may recall back in February last year, when the Seattle Times ran a story about UW professor Theo Eicher’s land use regulations study, with the headline declaring “Rules add $200,000 to Seattle house price.”
Here at Seattle Bubble we had serious questions about the dramatic conclusion in that study, and the methods that led to that conclusion:
…my two biggest problems are that the study alleges a negative influence on home prices due to the mortgage market, and that the time period encompasses only a relatively strong period of growth for the housing market.
Thanks to a reader tip, I came across a more lengthy paper from a group called the American Planning Association that goes into more detail than my post did, and concludes that the effects of regulation were grossly overstated in Eicher’s study. Here’s what they came up with:
The bottom line is that regulations are unlikely to contribute more than 17% of the final price of a typical home, and the impact in many communities may be much less. To use Seattle as a point of comparison, 17% would represent about $68,000 (in current dollars) of a $400,000 home.
You can download a pdf the entire study to read through and decide for yourself whether Mr. Eicher or the APA are closer to the truth of the matter.