The Distaste for Housing Density

Research has established local regulations limiting housing unit density have contributed to growing affordability problems across many housing markets. Less well understood is the value existing residents place on low neighborhood density. We estimate suburban homeowners’ preferences for density by regressing house prices on a localized measure of density exposure. For identification, we derive a formula instrument based on a house’s distance to a border with a discontinuity in minimum lot sizes, drawing on recent advances in applied econometrics. We find adding 100 houses within 500 meters decreases a house’s value by 1 to 2% on average, though effects vary widely across neighborhoods. Linking to a hedonic model, these estimates suggest the typical preference is moderately negative, but tastes differ substantially across households. These results provide an important foundation for understanding the demand for density regulation across U.S. suburbs.