Effects of Land-Related Policies on Land Development during a Real Estate Boom and a Recession

Abstract

Our research evaluates and compares the effects of three land-related policies on land development in a sprawling metropolitan area during a real estate boom and a recession. Our findings suggest that during a real estate boom 1) the urban growth boundary (UGB) serves its purpose of attracting urban development inside the given boundary during a boom while its effectiveness diminishes with increased development pressure from lower-valued land outside of the UGB during a recession period, 2) the agricultural zone works well for restraining new development during a boom period while agriculture zoned parcels are more likely developed during a recession period, and 3) an increase in the land-value tax bill increases the incentive for development during a recession period while higher tax bills do not affect development during a boom period. In anticipation of a re-emergence of urban sprawl with the recovery of the real estate market, our findings imply that land planners and others concerned with sprawling development should pay more attention to development in sprawl-prone areas during recession periods.