March 17, 2025 2:01PM # Land-Use Regulations Make Housing Less Affordable By [Jeffrey Miron](https://www.cato.org/people/jeffrey-miron) and Jacob Winter --- SHARE Listen to this article Generated with [ ElevenLabs](https://elevenlabs.io/) AI technology. Loading the [Elevenlabs Text to Speech](https://elevenlabs.io/text-to-speech) AudioNative Player... ![housing, build](/sites/cato.org/files/styles/pubs_2x/public/2024-12/housing%205.jpg?itok=Ph809Eoi) US [housing prices](https://home.treasury.gov/news/featured-stories/rent-house-prices-and-demographics) have risen faster than income since 2000, making housing less affordable. The solution is more housing, and the question is, what is holding that back? Recent research ([Cato Research Brief no. 424](https://www.cato.org/research-briefs-economic-policy/why-has-construction-productivity-stagnated)) finds that land-use regulations have made construction firms less productive: > The likelihood that a project is approved decreases as its size increases. Thus, regulation causes the average project size to shrink as entrepreneurs pursue a smaller project scale for a higher probability of receiving a permit.… As firm size shrinks, so do incentives to invest in technology. The overall productivity of the industry consequently declines. Indeed, the authors present evidence that: > areas with stricter land-use regulations … have smaller and less productive construction firms. \[Moving from\] Atlanta’s \[to\] San Francisco’s regulatory strictness is associated with a 12 percent reduction in total revenue per firm and a one-third reduction in the share of employment in large firms. Ultimately, their findings reveal: > much less residential and nonresidential construction activity in areas with stricter land-use regulations. This research adds to the [growing evidence](https://reason.org/commentary/land-use-regulations-continue-to-cause-housing-shortage/) that relaxing land-use regulations is the most effective way to expand housing supply and increase affordability. For example, local governments should [allow](https://www.cnn.com/2023/08/05/business/single-family-zoning-laws/index.html) more multi-family developments. *This article appeared on* [*Substack*](https://jeffreymiron.substack.com/) *on March 15, 2025.* ##### Related Tags [Economics](https://www.cato.org/economics), [Regulation](https://www.cato.org/regulatory-studies) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).