Neighborhood spillover effects between rezoning and housing price

The objective of this research was to investigate neighborhood spillover effects between rezoning of vacant parcels and housing price in the Knoxville, TN area. The study is unique in that it correctly highlights the need to analyze the dynamics of zoning structure and accommodates the neighborhood spillover effects associated with the real estate market. Results indicate that the probability of rezoning vacant land is expected to increase as housing price in a neighboring location increases. The rise in the housing price in a neighboring location implies increasing pressure on housing demand. This increased pressure on housing demand likely contributes to greater demands for residential development and commercial development that complements residential use. Currently, the major guidelines for the approval of rezoning petitions, according to the planners in the Knoxville area, are consistency with long-and short-range land use plans adopted by state, municipality, and county governments, and consistency with surrounding land use and environmental constraints, e.g., slope, flooding, and drainage. Local planning authorities can modify and update consistency measures in the current guidelines by accounting for varying degrees of housing demand pressure. For example, consistency measures can be strengthened in areas with greater housing-price increases, if preservation is desirable because these areas are likely to experience greater rezoning pressure.