A zoning change increases permitted density from four to eight units per acre. What is the likely effect on site value?
Correct Answer
A) Value rises if the market supports the added units
Why this is correct: A zoning change that increases density creates potential value, but that potential is only realized if the market demand exists to absorb the additional units profitably. Value is based on economic feasibility, not just legal permission. Why the other choices are wrong: Value does not double proportionally; market absorption and development costs affect the increment. Value does not fall due to crowding; increased density typically increases potential yield. Zoning is a key market factor influencing highest and best use. Exam tip: Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive. A zoning change affects the first test, but feasibility is critical.
Why This Is the Correct Answer
Why this is correct: A zoning change that increases density creates potential value, but that potential is only realized if the market demand exists to absorb the additional units profitably. Value is based on economic feasibility, not just legal permission. Why the other choices are wrong: Value does not double proportionally; market absorption and development costs affect the increment. Value does not fall due to crowding; increased density typically increases potential yield. Zoning is a key market factor influencing highest and best use. Exam tip: Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive. A zoning change affects the first test, but feasibility is critical.
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