NC Media Watch

A quest for reason and accuracy in letters to the editor, guest editorials and other issues of interest to the citizens of Western Nevada County.

Sunday, February 20, 2005

Affordable Housing Prices & RQC

There is an interesting article in the Feb. 12th-18th Economist. It discusses an article coming out in the American Economic Review which asks: Why Have Housing Prices Gone Up? I have included the abstract below. The paper is based on a Harvard study of 300 housing markets. I found the last sentence of the abstract most interesting: “Our preliminary evidence suggests that there was a significant increase in the ability of local residents to block new projects and a change of cities from urban growth machines to homeowners' cooperatives.”

Can we all say Rural Quality Coalation?

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Why Have Housing Prices Gone Up?
Edward L. Glaeser
Joseph Gyourko
Raven Saks

Since 1950, housing prices have risen regularly by almost two percent per year. Between 1950 and 1970, this increase reflects rising housing quality and construction costs. Since 1970, this increase reflects the increasing difficulty of obtaining regulatory approval for building new homes. In this paper, we present a simple model of regulatory approval that suggests a number of explanations for this change including changing judicial tastes, decreasing ability to bribe regulators, rising incomes and greater tastes for amenities, and improvements in the ability of homeowners to organize and influence local decisions. Our preliminary evidence suggests that there was a significant increase in the ability of local residents to block new projects and a change of cities from urban growth machines to homeowners' cooperatives.

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