The impact of housing supply restrictions



Here is a related column by Noah Smith.


Locations don't grow productivity, people do. Move a lumberjack to San Francisco and you get a lumberjack.

Tools and teams matter. Especially in modern economies.


Plus they don't waste time mowing the lawn, because they can't afford one.


Sure, but the industry pays enough to let thousands of kids move to SF. High housing costs price out the people who don't enjoy the sector-specific productivity fillip.


'Of course locations grow productivity.'

Until they don't - look at the capital cities of empires to see how that works. For a classic example, Rome's history does not require all that much effort to learn..

Yes, for sea harbors, and such.




@Harun: Yes, it would. As software developer I can attest, that one's productivity grows exponentially if you surround yourself with other high-skilled people. Same usually goes for the sciences as well.

Yeah - locations not random exogenous shocks - the low-income person in (say) retail isn't really going to become more productive, but will maybe increase profits by moving to a higher mark-up location.


Sure, but people who move to SF aren't randomly drawn and dropped there. Same goes for people who leave SF. You take a perch there if you are more productive there than you would be somewhere else. Making perches artificially scarce reduces the gains from trade available to all.

"You take a perch there if you are more productive there than you would be somewhere else."







If the answer were any but "yes", one wonders how they had become so densely populated in the first place....

In my novel Jack's World, I use "beyond" 233 times.

How's Beyond Complacency?


"Fischel (2001) describes reasons why homeowners might want stricter residential land use
improving local public services, controlling congestion, etc."






... unless zoning, whatever, either

I have lived for three decades in New Hampshire, and basically all zoning and other regulation is done to ensure no hikes in property taxes and no sales tax or income tax. That means the number one priority is keeping out kids and poor young people who will have kids, where "poor" is any family with income less than about $80,000.

After making sure taxes aren't hiked to build schools, making sure taxes aren't hiked to build water and sewer, hiked to address road congestion, hiked to build new roads, hiked to fix roads built by developers, hiked provide emergency services, etc.


What's wrong with Houston zoning or lack thereof? I'm from the area (The Woodlands) and the entire metro area has boomed in the last decade. Are the previous home owners slightly worse off due to increased congestion and development...of course...but hundreds of thousands of people are WAY better off now for moving to the area (or they wouldn't have in the first place) and long term the area is richer because of it.



NIMBYs and NAMBYs and LITTLE BAMBYs, I like Paris. I really like Paris. Paris doesn't have sky scrapers. Not because developers don't want to build them, but because "regulations". Would Paris be Paris if the skyline looked like Manhattan? I don't think so. But times are changing. Paris has approved the “Tour Triangle", a 590-foot tall building in the 15th arrondissement. Are the floodgates open? I hope not. I prefer "regulations".

Rich lawyer prefers regulations.




Ever heard of the La Defense business district? There is a large cluster of office towers similar to London's Canary Wharf.


Well of course you as a tourist want Paris to be Paris forever, but some poor Joe trying to get to work in the morning that can't find housing anywhere close would prefer a shorter commute.

Now I'll hold my breath while self-described housing activists and advocates for the poor clamor for housing deregulation. Here is one example of what I'm talking about:

Surely there's a limit to this. San Francisco could allow gigantic, 30-story a side apartment flats on every block but at some point you're still on a peninsula surrounded by water. Not to mention, smart, wealthy people with families tend to favor lower population density and will do what they always do: buy up housing in human scale, lower density Palo Alto and vote for a local government that keeps it that way.

Imagine if the square mile of Alameda Naval Air station could be built with the population density of Shanghai's inner core - we could add 120,000 residents to the Bay Area. It could be car free, and connected directly to BART's lines through West Oakland.

Noah Smith's article was perhaps the worst in a succession of bad articles. Markets are forward looking. They priced in the positive effects of the Trump administration's light touch with regulation (as opposed to the constant Obama hammer) almost immediately. Why would noah expect a constant climb there after? I suppose he is a liberal and therefor has no idea how markets work?



If you want more of something then reduce or eliminate the taxes and regulations. If you want less then increase taxes and regulations. For reasons that sometimes defy common sense America is full of people who are willing to put up their own money and work 80 hours a week to build a business. And our government(s) are full of people committed to stopping them. That's the entire story in three sentences. You don't need a study or a book or a degree in economics. That's all you need to know. Now the question is do we let productive people succeed and create jobs or do we stop them???

Two observations.


2. 2007 was an outlier pre-crash year for real estate values that substantially corrected immediately thereafter and wasn't supported by fundamentals. Meanwhile 1980 was a near trough in real estate values.

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