The Old-School Liberal

“Freedom granted only when it is known beforehand that its effects will be beneficial is not freedom” — Friedrich Hayek

Land Regulation Fosters Pricing Bubbles

Posted by Poorsummary on April 6, 2008

“In places with fewer building restrictions, like Atlanta and Dallas, housing price volatility is moderated by a construction sector that supplies extra houses during booms and ratchets back building during downturns. In California and Massachusetts, where abundant land use restrictions keep new construction low, any uptick in demand translates into higher prices, which then come back to earth. If an area’s prices go up by an extra $100,000 over five years, then, on average, those prices fall by an extra $32,000 over the next five years.”

..Yet another example of the unintended consequences of government meddling (and yet another way the government shares in the blame of the housing bubble).


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