Land-use regulation can affect prices in other ways as well. A wide range of homebuilders compete for business in relatively unregulated markets, ranging from small companies that produce only a few homes each year, to medium-sized companies that produce a few hundred homes per year, to giant national companies that build thousands of homes in many different states.
Excessive regulation tends to put the small companies out of business and discourage the national companies as well. The resulting loss of competition helps keep home prices high. Portland, Oregon’s, “urban-growth boundary has really been our friend,” says one mid-sized Portland homebuilder. “It has kept the major builders out of the market.”
Cato Policy Analysis
October 1, 2009