Minimum-Lot-Size Regulations Mean Less Housing
Local governments regulate land use extensively: height requirements, parking requirements, and floor area ratios are just a few examples. Another—and one of the most common—is a minimum lot size. A new study from the Mercatus Center at George Mason University shows that minimum-lot-size regulations in Texas force people to buy more land than they otherwise would, which limits population density and ultimately drives up housing prices.
As defined in the study, a “minimum-lot-size regulation is a requirement that every individual parcel of land in the regulated area be equal to or greater than a specified square footage.” Researchers have found that such regulations increase the cost of housing by requiring people to purchase more land, exacerbate segregation by income, and encourage sprawl. While these effects are more pronounced in high-demand areas such as Seattle, New York, and other large coastal cities, they exist anywhere the regulations bind or force people to buy more land than they want.
To examine whether minimum-lot-size regulations limit housing density in cities often considered pro-growth, city planner Nolan Gray and economist Salim Furth examined four Texas cities: Frisco, Pflugerville, Round Rock, and Pearland. The authors create lot-size ratios (LSR) for the parcels in each city. This is the ratio of actual lot size to the regulated minimum lot size. A LSR of 1 to 1.1 is an indication that the minimum lot size is binding and thus limiting density. The figure below shows the LSR distribution for Pflugerville.