Housing Prices, Supply, and Innovation

Housing prices have soared in many U.S. and international cities, which has generated affordability problems for middle- and lower-income families.An article in theWall Street Journal today by Laura Kusisto and Peter Grant notes, “Across 32 major cities around the world, real home prices on average grew 24% over the last five years.”Kusisto and Grant imply that the blame should be shared: “Governments haven’t had the money to subsidize new supply … The private sector has also fallen short.” And they say, “But no approach has solved the crises and most have other negative ripple effects.”But then the reporters undercut their own narratives with news about Tokyo:But one major city has had stable housing prices as a result of pumping out housing supply to keep up with rising demand.Tokyo is one of the few cities in which supply has kept up with demand, keeping a crisis from developing. But that is due largely to deregulated housing policies that other countries would have a hard time reproducing.“It goes against the notion of planning and developing cities in an orderly fashion,” said Laurence Troy, research fellow at the City Futures Research Centre of the University of New South Wales, Australia.So maybe the idea of imposing top-down “order” is harmful. If the government gets out of the way, businesses can invest, supply will increase, and prices will be restrained.Not only will supply increase, but Kusisto and Grant report that businesses in deregulat...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs