Home Values Grew Most in Markets With Strictest Land Use Regulations

• Home values and job growth have both risen since 2010, but home values grew much more steeply in metros with stricter land use regulations.
• Every additional 10 percentage points of job growth were associated with 25 percentage points of home value growth in heavily regulated metros, versus only 4.5 percentage points in lightly regulated metros.

Most U.S. metros have seen robust job growth in the years since the recession: The national workforce grew 12.5 percent, from 125 million jobs in January 2010 to more than 140 million in January 2017. Simultaneously, the housing market recovered from its crash, with the U.S. median home value rising 19.6 percent during those seven years, from $163,000 to $195,000.

But the national growth masks a great deal of variation among metropolitan areas. For example, in Denver home values rose 60.8 percent as jobs increased 22.6 percent, while in Atlantic City, N.J., home values fell 25 percent while jobs decreased 8.5 percent. Denver has become another tech hub and has a strong and diverse economy, while Atlantic City—once a tourist hub and one of the few places where you could go to gamble outside of Nevada—has struggled since the recession to regain an economic foothold, especially as rising seas and extreme weather have caused significant damage to the metro area.

Overall, job growth is strongly positively associated with home value growth: On average, every 10 percentage-point increase in jobs from 2010 to 2017 came with a 14 percentage-point increase in home values. But that relationship, it turns out, depends in part on how markets regulate the residential land use and construction.