Zoning on the Urban Fringe: Results from a New Approach to Modeling Land and Housing Markets

This paper uses an economic agent-based model of land use in a hypothetical urban fringe community to examine the effects of large-lot zoning on land conversion, land prices, and the spatial configuration and density of new development. The model incorporates the actions of heterogeneous housing consumers, developers, and farmer/landowners who make economic decisions in land and housing markets. The model allows for population growth and simulates the evolution of land use patterns and prices over a 20-year time period. Zoning regulations in the form of minimum lot size restrictions imposed in an outlying area are shown to have effects that vary with the stringency of the regulations: 2-acre minimum lot sizes have little effect on the spatial patterns of development, but they do increase land and housing prices and result in higher incomes in the region; 5-acre minimum lot sizes push development toward the city center, leaving agricultural land in the zoned region undeveloped until quite late in the simulation period. While house prices are higher with 5-acre zoning, land prices in the zoned region fall, highlighting the countervailing influences of lot size restrictions on land prices. The new modeling approach allows for the tracking of the transitional dynamics of development, both over space and time as the urban area grows.

Communities across the United States have implemented a variety of programs and policies to combat sprawl, yet residential development in American exurbia remains characterized by discontinuous or “leapfrog” development and large average lot sizes.

Zoning codes that regulate minimum lot size are an important part of the local planner’s toolkit in suburban and exurban settings. They allow planners to limit high density uses, control growth, and preserve open space and farmland. Yet actual land use outcomes with these regulations are highly uncertain.

In two RFF discussion papers, Nicholas Magliocca, Virginia McConnell, Margaret Walls, and Elena Safirova explore the spatial patterns and time path of housing development in a range of settings. In one paper, “Explaining Sprawl with an Agent-Based Model of Exurban Land and Housing Markets,” the authors develop a unique agent-based model of housing and land markets and use it to study the dynamic and spatial patterns of development in a hypothetical community on the urban fringe. They examine land and housing markets in a developing region, as well as the major influences on patterns of development. In the second, “Zoning on the Urban Fringe: Results from a New Approach to Modeling,” the authors use the model to examine the effects of large-lot zoning in one region on land conversion, land prices, and the spatial configuration and density in both that region and other surrounding areas. They find that the type and stringency of zoning requirements are important: their findings suggest that a two-acre minimum lot size in one region could encourage sprawl by keeping all developing regions in low-density development, whereas larger lot size requirements in the zoned region would tend to result in more contained development elsewhere.