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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Elroy Jetson who wrote (21948)7/5/2004 2:18:33 PM
From: Wyätt GwyönRead Replies (1) of 306849
 
Elroy,

would be curious as to your take on this article, cited in the latest Mauldin article. the thesis is that egregious housing prices on the coasts can be explained by heavy regulation, which unnecessarily reduces supply. viz,

The second hypothesis is that high housing prices are the result of land use regulation, which deters new construction, not the absence of land. This suggests that cross-space and cross-time variation in housing prices are best understood as the result of increasingly tough regulation of developers. This regulation of course may be a good thing. Developers do not naturally internalize every externality. Still, according to this hypothesis, regulation --not land shortage -- lies at the roots of high housing costs.
nber.org

i do not really see how the regulation designed to preserve the membership of elitist yuppie enclaves in Northern Cal, can be used to explain strong prices seen in the expanding sprawl of such eyesores as Riverside or Temecula.

reading these academic papers, which focus in abstract detachment on supply or demand, i get the feeling these propellerheads have not considered the effect of easy credit on home prices. that, plus the feed-on momentum effect of a strong housing bubble once it gets going.
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