As a regular reader of our social media posts, you probably have noticed that we have been focusing lately on the negative effects of heavy land-use restrictions in closed access cities and it seems like the idea is starting the get some traction in the mainstream. Even the Nobel Prize winner, Paul Krugman, typically in favor of regulation, states in his recent article in The New York Times that there is too much regulation in New York City as well as nationally. Jason Furman, the Chairman of the White House Council of Economic Advisors, recently pointed out that national housing prices have risen much faster than construction cost since the 1990s, and identifies land-use restrictions as the most likely culprit.
So where does that leave us? Gentrification in desirable cities is driving demand and over regulation is limiting supply thereby putting rental rates and sales prices at levels fewer and fewer people can afford. Less regulation would help increase the supply of housing and thereby ensure that the inward migration of the elite doesn’t drive out everyone else.
By Tom Farrell, Director of Business Development