We develop a framework to estimate the economic value of a recent zoning reform in the city of Sao Paulo, which altered maximum permitted construction at the city-block level. Using a spatial regression discontinuity design, we find that developers file for more multi-family construction permits in blocks with higher allowable densities. We incorporate these micro-estimates into an equilibrium model of housing supply and demand to estimate the long term impact of zoning changes. Supply responses from the reform produce a 2.2 percent increase in the total housing stock, leading to a 0.5% reduction in prices on average, with substantial heterogeneity across neighborhoods. Consumer welfare gains due to price reductions are small, but increase 4-fold once we account for changes in the built environment, with more gains accruing to college-educated and higher income households. However, nominal house price losses faced by existing homeowners and landlords overshadow all consumer welfare gains.