Comments on: Smart Growth and the Housing “Bubble”

By: Wayne

Wayne — Mon, 20 Jun 2005 20:54:12 +0000

Interesting opinion on the housing bubble:
http://www.investmentu.com/IUEL/2005/20050606.html

By: Kurt

Kurt — Fri, 03 Jun 2005 16:59:40 +0000

One way to quantify the cost of ‘smart growth’ is to measure the disconnect between building costs and sales prices. If there are no growth/building restrictions then over the long term sales prices should not be higher than construction+land costs.

http://www.manhattan-institute.org/html/cr_39.htm

This paper has a fairly rigorous (but interesting) analysis estimating that in Manhattan only 50% of purchase price represents construction cost; presumably the remaining 50% is various regulatory costs and rents. I suspect that neighboring homeowners, who in Manhattan are very efficiently organized to oppose new construction, will enjoy some benefits as higher asset prices on their own property (by restricting new supply). They devote time and energy to lobbying against new buildings and in return enjoy price appreciation (just another method of artificial supply restrictions)

By: Half Sigma

Half Sigma — Fri, 03 Jun 2005 03:46:14 +0000

I’ve been blogging about this for a long time. Here’s a link to my old post:

http://www.calicocat.com/2004/08/blue-statered-state-and-high-cost-of.html

By: Mr. Econotarian

Mr. Econotarian — Thu, 02 Jun 2005 21:40:46 +0000

Zoning laws also put perverse upward force on housing prices by encouraging larger houses. This has been a gradual process, as price per square foot of house has declined despite price per median house rising, because houses have become huge (while families have become smaller).

BTW, I just spend 6 months waiting to get a building permit...for a house in an existing development.