McGill University

Delays in Zoning Approvals and New Housing Developments

Zoning restrictions form a major component of the regulatory burden faced by developers (homebuilders), and vary from city to city and lot to lot. Proposed new housing conforms to existing zoning, requires the zoning of non-zoned land, or requires a change to existing zoning in either land use type or density. This project examines the impact of the primary municipal land use regulation in North America: how does the need to undertake a potentially costly and troublesome rezoning process, within a given real estate market, affect the sale price of newly built housing?

This research seeks to detect this effect in housing markets in the amalgamated City of Toronto, primarily focusing on developers of high-rise buildings. The study are has undergone urbanization and demographic transformation over the past few decades. The City of Toronto is home to 2.5 million inhabitants.

Primary data on housing location and sales for 1997-2005 is provided by RealNet Canada, and supported by publicly available data on zoning and zoning changes for the relevant individual properties, and qualitative information obtained by surveying the housing developers active in the area.

Econometric models will be estimated to determine the effect of zoning changes on developer behavior, perceived project viability, and housing prices. The price of new homes will be modeled as a function of lot size, the time required for zoning approval, a binary variable to control for change in zoning, and other neighborhood/accessibility attributes. Additional analysis will clarify the deterrent effect of administrative procedures, and the subsequent impacts on the competition between municipalities for new development and new residents. The results will be of interest to municipalities seeking to clarify the role of their zoning procedures in the price and supply of new housing, to developers wishing to understand the impacts of regulation on their choices, and to researchers examining the contribution of zoning bylaws to the overall regulatory framework influencing the location and type of new housing.