aTypical Joe: a gay New Yorker living in the rural South
Friday, July 29, 2005
High housing prices
Instead of the traditional formula “housing price equals land price + construction costs + reasonable profit,” we seem to be seeing something more like “housing price equals land price + constructions costs plus reasonable profit + mystery component.” And, most interestingly, the mystery component varies a lot from city to city.
[...]
Edward Glaeser of Harvard and Joe Gyourko of the University of Pennsylvania have computed these mystery components for about two dozen American cities. They speculate that the mystery component is essentially a “zoning tax.” That is, zoning and other restrictions put a brake on competitive forces and keep housing prices up.
That sounds right to me. And I don’t see it as a problem. Rather, it’s information to be considered and factored in.
