Why Have Housing Prices Gone Up?

An academic article in the Harvard Institute of Economic Research suggests that regulatory obstacles are the primary reason housing prices have risen so much since the 1970s.

1 minute read

April 20, 2005, 9:00 AM PDT

By Chris Steins @planetizen

Since 1950, housing prices have risen regularly by almost two percent per year. Between 1950 and 1970, this increase reflects rising housing quality and construction costs. Since1970, this increase reflects the increasing difficulty of obtaining regulatory approval forbuilding new homes. In this paper, we present a simple model of regulatory approval thatsuggests a number of explanations for this change including changing judicial tastes,decreasing ability to bribe regulators, rising incomes and greater tastes for amenities, andimprovements in the ability of homeowners to organize and influence local decisions.Our preliminary evidence suggests that there was a significant increase in the ability oflocal residents to block new projects and a change of cities from urban growth machinesto homeowners cooperatives.

Thanks to Marginal Revolution Blog

FULL STORY: Why Have Housing Prices Gone Up?

Tuesday, February 15, 2005 in Harvard Institute Of Economic Research

Housing United States

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