It's Not In The Land After All

From an article in today’s EB TImes by by Benjamin Powell. The emphasis is mine

In my book, “Housing America: Building Out of the Crisis,” co-edited with Randall Holcombe, we document the many ways in which government regulations have made housing less affordable. Land-use restrictions, minimum lot sizes and setbacks, impact fees, permit moratoria, “belowmarket” mandates, urban growth boundaries and other policies all limit housing supply and decrease housing affordability.

A classic study by economists Edward Glaser of Harvard and Joseph Gyourko of the University of Pennsylvania examined the effect of government restrictions on housing prices in several markets around the United States. They found that 90 percent of the difference between physical construction cost and the price of new homes could be attributed to government restrictions on development. Only 10 percent of the difference was due to the intrinsic scarcity of the land. Municipal restrictions of short-term rentals are just one more misguided government disruption of housing markets. They leave valuable capital idle when it otherwise could serve consumers. Ironically, they help make housing less affordable by limiting an alternative income stream that can help owners better afford their homes.

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“They found that housing prices were about 20–40 percent higher in San Francisco area communities that had enacted growth management control plans in the 1980s.”

http://repository.upenn.edu/cgi/viewcontent.cgi?article=1007&context=penniur_papers

The system is rigged against the poor. :wink:

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