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 The Planning Penalty

The Journalists' Guide to the American Dream (html)

The Journalists' Guide to the American Dream (pdf, 2.2 mb)

Fact Sheet on Rail Transit (80-KB pdf file)

Rail Disasters 2005 (2.5 MB pdf file)

Report by Randal O'Toole finds rail transit strongly associated with reduced transit ridership:

Measures of Housing Affordability


The Planning Penalty uses several different measures of housing affordability and several indicators of whether land-use restrictions have made housing less affordable. These include:

  • Value-to-income ratio: This is the cost of a median house divided by the median-family income (both from census data). Depending on interest rates, a value-to-income ratio of less than 2 is generally affordable while a ratio greater than 3 is unaffordable.

  • Payback period: This is the number of years that a median-income family would need to pay back a loan equal to 90 percent of a median home value at prevailing mortgage interest rates. Fewer than 10 years is very affordable, 10 to 20 is affordable, 20 to 30 marginal, 30 to 40 unaffordable, and more than 40 severely unaffordable.

  • House price index: The Department of Commerce maintains a home price index for every metropolitan area extending as far back as 1975. This is an index of changes in the value of individual homes and thus does not reflect changes in size or quality over time as some other measures do.

  • Coldwell Banker home price index: Coldwell Banker publishes an annual survey of the price of a home suitable for a corporate middle manager (4 bedrooms, 2-1/2 baths, etc.) in each of more than 300 cities. While not as statistically accurate as the Department of Commerce data, it is still a useful touchstone.

  • 1999 to 2005 house price increase: Based on the Department of Commerce house price index, the increase in prices from 1999 to 2005 is a good indication of restrictions on housing supply. Markets with few or no restrictions saw prices increase by about 1 to 3 percent per year. Markets with land-use restrictions saw prices increase from 4 to 14 percent per year.