A common target when it comes to explaining the rising cost of living in many cities is prohibitive zoning restrictions that limit the construction of new housing. A recent study from George Washington University suggests that higher transportation costs may actually play a bigger part.
The researchers used an urban simulation model to examine the various factors underpinning housing costs in a city. They explain that many previous studies have looked at land use regulation, with these suggesting that zoning restrictions that inhibit the density of housing have resulted in surging house prices.
Formal modeling
These approaches seldom use formal models of a city, however, and therefore ignore things like the cost of transport on the cost of living. The new approach attempts to rectify this, and finds that while land use regulations are undoubtedly affecting living expenses for city dwellers, the cost of commuting to work is actually more important.
For instance, the researchers explain that zoning restrictions in a central business district often force residential developments to take place away from downtown. While these developments tend to provide more affordable housing units, the people living in them then must have a longer commute to get to work, which can add to traffic congestion and overall higher transportation costs.
“The city housing market is like a balloon,” the authors say. “Restrictions that limit housing density in some areas cause the balloon to expand in less restricted areas.”
The study also found that the various zoning policies used by cities didn’t really have an impact on the compensation offered to employees, even as they may be forced to move to different areas and commute further. As a result, the authors believe that the best approach would be for cities to invest in public transport to offset the impact land use regulations tend to have on people’s cost of living.
“Housing is expensive in cities, not due to construction cost, but due to the cost of land,” they conclude. “Nothing drives up the cost of land more than high transportation cost.”
