Land use regulation artificially limits the housing supply

From an article by Wendell Cox on …

The housing crisis isn’t over yet, as prices around the country continue to plummet. Despite the market’s continuing collapse, most commentary and analysis has managed to overlook one of the key factors in the creation of the original bubble: land use regulation that artificially limited the housing supply. Even worse, taking Rahm Emmanuel’s maxim to heart (let no crisis be wasted), officials at the city, state, and federal levels are coming up with regulatory and legislative measures to re-inflate this bubble.

The latest Moody’s report on housing carries sobering news (except perhaps for those it drives to drink). Moody’s expects house prices to fall even further in the most distressed markets, bottoming out at 66 percent below the peak in Miami, 58 percent in Phoenix, 56 percent in Las Vegas and 53 percent in Los Angeles. These losses are similar to those I predicted if house prices were restored to historic norms.



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