Government’s impact on housing

“In markets for, say, carrots or cars, rising
demand raises prices in the short run…. But houses are no ordinary good: when
demand for them rises, increasing the supply can be difficult. Not only do they
take time to build: building them at all can be hard, owing to planning laws
(known as ?zoning? laws in America) governing the use of land, the
density of housing and the heights of buildings…. In America, thanks perhaps
to a lower population density and greater popular support for home ownership,
the right to build has historically been much less
fettered.”

Real estate is a decidedly
local phenomenon, but is still subject to the wider range of market
economics.

The Economist has an excellent article on the
housing market. It is not as simple as supply and
demand.

“In markets for, say,
carrots or cars, rising demand raises prices in the short run. That encourages
producers to make more, which brings prices back down eventually. But houses are
no ordinary good: when demand for them rises, increasing the supply can be
difficult. Not only do they take time to build: building them at all can be
hard, owing to planning laws (known as ?zoning? laws in America)
governing the use of land, the density of housing and the heights of buildings.
In Europe, such restrictions have long been accepted. In America, thanks perhaps
to a lower population density and greater popular support for home ownership,
the right to build has historically been much less
fettered.”

Real estate is a decidedly local
phenomenon, but is still subject to the wider range of market
economics.

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