Friday, December 4, 2015

Land Use Regulations Have Increased Since 1970s: Raising Home Prices More Than Costs: Decreasing Affordability And New Apartment Construction: Increasing Sprawl: Exacerbating Housing Bubbles: Reducing Productivity

From BloombergView, "Your Landlord Is a Drag on Growth" by Noah Smith:
... U.S. Jason Furman, the chairman of the Council of Economic Advisers, gave a recent speech to the Urban Institute in which he .... noted that Americans are moving much less than they used to, and are also switching jobs less frequently.
Since the late 1970s, land-use regulation has skyrocketed in the U.S. That has caused housing prices to go up at a much faster rate than construction costs -- something sure to please existing homeowners, but which locks potential homeowners out of the market. The more zoned a city is, the less affordable it tends to be. Bloomberg View’s Justin Fox recently reported on how many fewer apartments are built these days. Undoubtedly, much of that is due to stricter land-use regulation.
Furman shows that states with more constrained housing supply have seen much slower income convergence between different cities. That strongly implies that land-use restrictions are effectively keeping people penned up in bad locations.

Of course, this is in addition to the other problems that zoning causes, such as the environmental costs of sprawl, the potential exacerbation of housing bubbles, and the productivity drag from reduced density.


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