State Growth Management and Housing Prices

Objective. In the United States, growth regulations aimed at environmental protection and better-quality urban areas have become very popular since the 1960s. Although many studies have examined the housing-price effects of local and regional growth management regulations, none has examined the effects of a state law. Past research has also tended to be cross-sectional, rather than longitudinal, and has frequently ignored alternate hypotheses that could explain housing-price trends. The research presented in this article examines the housing-price effects of Florida's Growth Management Act of 1985. Methods. Using secondary source data from all 67 counties of the state for the period 1980–1995 and employing pooled time-series analysis techniques I test the hypothesis that the Act had an inflationary effect on single-family house prices. Results. After controlling for alternate hypotheses such as population, income, and size of house, I find a statistically significant increase in the price of single-family houses attributable to statewide growth management. Also, the demand-side and supply-side price inflationary effects of growth management are similar in magnitude. Conclusions. Since higher housing prices could become the Achilles heel of growth management programs and thwart their implementation, I suggest a few ways some of the price inflationary effects may be reduced.