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Sapere aude - dare to be wise
Thursday, April 29, 2004
Posted 9:26 AM by Joshua Claybourn
Housing Crisis
Tony Jimenez and Joshua Davey are talking about rising home prices at "letters from babylon." They decry the rising costs within good school districts, but it's worth noting some other important factors. First and foremost, the size and quality of the average home has been steadily increasing. According to the National Association of Home Builders, the average home size in the United States is now 2,000 square feet, up from 1,400 square feet in 1970. Combine that higher quality with inflation, and you're bound to see an increase in house prices. Then there's immigration. With such a large influx of immigrants each year, supply needs lag behind and haven't yet caught up with demand.

Yet an unsung culprit in this whole mess is government regulations, specifically zoning. As professor Edward Glaeser of Harvard University and Joseph Gyouko of the University Pennsylvania explain, zoning changes come with a steep price. The professors use three tests to see if it's housing supply costs, the price of land, or the time between re-zonings. Their conclusion?
America is not facing a nationwide affordable-housing crisis. In most areas of the country, home prices appear to be fairly close to the physical costs of construction. In some areas of the country, home prices are even far below the physical costs of construction. Only in particular areas, especially New York City and California, do housing prices diverge substantially from the costs of new construction....

...The bulk of evidence that we have marshaled suggests that zoning and other land-use controls are more responsible for high prices where we see them....

...If policy advocates are interested in reducing housing costs, they would do well to start with zoning reform.
It seems, then, that zoning is the true villain in rising home prices (and whether they're rising unnecessarily is a matter of debate).

Update: The ultimate solution to housing problems is just to live in the school library, as this kid did. After administrators became aware of his experiment in housing, they gave him free room and board for the rest of the term.

As seen in the
National Jurist
and on

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