Welcome! I am an Assistant Professor of Finance and Real Estate at the University of Colorado Boulder (Leeds School of Business).
My research interests are Urban and Real Estate Economics, Public Economics, and Industrial Organization. My current research studies zoning regulations in the United States.
Email: jaehee.song@colorado.edu
I construct a new nationwide dataset to measure the stringency of residential zoning in the U.S. and use it to examine the effects of zoning on housing prices and demographic sorting. First, I develop and apply a structural break detection algorithm to infer minimum lot size regulations from property tax records. These minimum lot size estimates cover 16,217 local jurisdictions and are geographically detailed, capturing both across-jurisdiction and within-jurisdiction variations in zoning stringency. I then use this constructed data and a spatial discontinuity design at municipality borders to evaluate the impact of the regulations in housing markets. I find that a larger minimum lot size increases home prices and rents. For example, doubling the minimum lot size increases sales prices by 10 percent and rents by 6 percent. I also find that neighborhoods with restrictive zoning disproportionately attract high-income white homeowners, intensifying residential segregation.
Why Zoning is Too Restrictive
with Jack Favilukis
Zoning restrictions lowered aggregate growth by 36 percent (Hsieh and Moretti, 2019). If these restrictions are so costly, why do they exist? We propose a novel theory for why zoning is more stringent than the social optimum: the more zoning authorities a metro is fragmented into, the more restrictive zoning is in the metro. When zoning decisions are made locally, voters restrict development to avoid local congestion externalities, but fail to internalize worsened metro-wide housing affordability. Empirically, the HHI of local governments within a metro alone explains 12 percent of zoning variation across the U.S. Using lagged HHI in 1900 as an instrument, we show that fragmentation of zoning authorities increases zoning stringency and housing costs. Our results provide clear policy advice --- zoning decisions should be made globally. Indeed, facing housing affordability crises, several states and nations have begun to adopt global zoning reforms.
Exclusionary Zoning and Transportation
Work In Progress
Historians document that suburban communities historically set stricter zoning laws to prevent the inflow of racial minorities. They argue such practices were especially common in response to transportation developments, which allowed minorities to more easily access suburban communities. In this project, I study the effect of increased potential inflow of racial minorities on the stringency of residential zoning by leveraging variations in transportation networks and out-migration shocks. To do this, I assemble a data set on the railroad and highway networks during the 1900s. I first estimate a model of migration using 1935 to 1940 migration flows. Then, I use the estimated model to predict the inflow of Black households from 1940 to 1970 given the change in transportation networks and economic conditions in their prior locations. My preliminary findings indicate that municipalities that expected more Black inflow imposed stricter minimum lot area regulations.