Why Exactly Won’t We Build? - by Robin Hanson
Why is US housing to expensive? “Two words: government regulation … Housing prices stay high in desirable areas because most governments strictly regulate new construction. … ‘Take it from Paul Krugman, the most eminent progressive economist alive. “High housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building heights in the cities, zoning that blocks denser development in the suburbs, and other policies constrict housing on both coasts.” …
Americans spend about 20% of their budget on housing … 62% of renters favor BANNING new development from their own neighborhoods. Only 40% of homeowners agreed. … Inflation-adjusted housing prices have roughly doubled since 1980 even though BUILDING costs have stayed about the same. The upshot is that deregulation could plausibly cut housing prices by 50%. …
Conservative estimate: If the Bay Area and NYC deregulated housing the level of the typical U.S. city, the whole country’s GDP would rise by 14%. Optimistic estimate: … 36%. If we add these productivity gains to the straightforward consumer gains, we’re talking about making the average American anywhere from +25% to +47% richer. Year after year.
