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Habeas Domus

Why Falling Home Prices Could Be a Good Thing

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https://www.nytimes.com/2017/02/10/upshot/popping-the-housing-bubbles-in-the-american-mind.html?smid=fb-nytimes&smtyp=cur&_r=0

So instead of looking at homes as investments, what if we regarded them like a TV or a car or any other consumer good? People might expect home prices to go down instead of up. Homebuilders would probably spend more time talking about technology and design than financing options. Politicians might start talking about their plans to lower home prices further, as they often do with fuel prices.

In this thought experiment, housing prices would probably adjust. They would be somewhat cheaper in most places, where population is growing slowly. But they would be profoundly cheaper in places like super-expensive San Francisco.

That was the conclusion of a recent paper by the economists Ed Glaeser of Harvard and Joe Gyourko at the Wharton School of the University of Pennsylvania.

Google link in case of firewall

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"The paper uses construction industry data to determine how much a house should cost to build if land-use regulation were drastically cut back."

To add regarding fears of "building over everything". Already built on / permission to build on land would become cheaper due to the competition, so the amount of building actually needed might not be the same as how much is projected to be needed based on estimations done before hand.

"Say we opened the floodgate of development. What kind of effects could we expect? The economy would grow, and by a lot."

Good! (and as above)

" local land-use regulations reduce the United States’ economic output by as much as $1.5 trillion a year, or about 10 percent lower than it could be."

That is huge.

Shame there's no mention of banks / lending regulation though.

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