Which Regions Have the Strictest Building Regulations?

The coasts may be billed as homes of carefree living with beaches, boardwalks, and ocean air. But when it comes to building regulations, the coasts are anything but stress-free for builders. The National Bureau of Economic Research found that the most strict building codes exist on the coasts, according to a working paper that surveyed over 2,400 primarily suburban jurisdictions in America. Areas around San Francisco and New York City top the list with the most heavy regulations. However, regardless of how strict jurisdictions are, some trends were common across the nation. While impact fees are on the decline overall, minimum lot size requirements are on the rise, coming at a time when the debate around upzoning, lot size, and the need for affordable housing is heating up. 

In December, the National Bureau of Economic Research (NBER) released a working paper announcing the release of an updated version of the Wharton Land Use Regulatory Index. The paper’s lead author, Joseph Gyourko, is a professor at the Wharton School who is well known for his research in this area and worked with the previous version of the index.

The index is based on a survey of over 2,400 primarily suburban jurisdictions across the U.S., conducted in calendar year 2018. Answers to the survey are used to construct twelve component indexes (capturing political pressure, number of approvals required, involvement of the state legislature and the court system and the local population in the process, explicit caps on production, density restrictions, presence of impact fees, and the time it takes to obtain approval).  The twelve components are combined into an overall index, scaled so that it has an average value of zero and a higher index number indicates more restrictive local land use regulation.

Averaging the index across each of the 44 metropolitan areas that had data on at least ten communities in 2018 clearly shows that the most restrictive regulatory regimes tend to be found on the coasts.  The metros with the most restrictive regulations, according to the 2018 Wharton Index, are San Francisco-Oakland-Hayward (with an average index of 1.18) and New York-Newark-Jersey City (with 1.04).

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