Tuesday, December 13, 2005

Washington Times: 'Limits on homes push up prices'

In the Washington Times business section there was recently an article titled 'Limits on homes push up prices'. It proclaims that the main reason for the huge rise in home prices is because of limits on development.

Escalating prices that have made houses unaffordable for many people in Washington are mostly the result of homeowners using political and regulatory means to block construction of new housing, economic studies show. ....

Certainly there have been restrictions on residential growth during the housing bubble period. However, during recent non bubble periods there restrictions were alive and well ( ex. mid 90's ). These residential restrictions are definitely a part of the equation in certain metro areas.

Look at places like Bakersfield, CA (123% in 5 years ) or Reno, NV ( 103% in 5 years ) where there has been little restrictions on residential building and an explosion in home construction in the past few years. These places have still experienced very strong price appreciation. Residential building restrictions are a small factor in the housing boom and certainly not the primary reason for skyrocketing home prices. The three main factors driving this housing boom are low interest rates, very lax lending standards, and speculation.

7 comments:

  1. I agree.

    There may be restrictions on building houses, but there are plenty of condos and townhouses popping up anyway, all over the DC area. And the prices of these are bubbly as well.

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  2. Reno, NV has passed a ballot initiative restricting population growth to 2% annually. The justification for this was water shortages.

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  3. from Bakersfield - I can confirm there are NO restrictions here and there is SOOOO much land for miles in all directions. Prices up beacause of speculation and EASY/CHEAP CREDIT!

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  4. Also, although the growth in the housing stock has been slow due to regulations in the DC area, let's not forget that the population of DC proper continues to fall, and so housing growth in DC does appear to at least be keeping up with population growth (er...population fall, as it were). Hasn't prevented a bubble.

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  5. Washington Times is crap. It has been a propaganda tool for this administration. Who would bother reading it?

    It louded the war, and now is trying to mislead the public about the bubbled DC housing market. But you know what, whenever they said good about something, the reality turned out to be the otherside.

    Reading it would only entertain you, which might not be bad.

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  6. Unaffordable housing is unamerican.

    House prices are up for many reasons and it is true WT is a conservative paper, but there is some truth to it. I have heard that Loudon county (home of MCI and a new Biotech office complex among other things) courts job growth, but limits house growth. That's morally wrong.

    As I get older I realize that the 'free markets' is a bunch of crap. The people in power have friends in power who have friends in power.

    The result of high housing will be a rapid acceleration in offshore outsourcing. People in China, India and other places are very smart and can have a decent lifestyle for a fraction of a D.C. area resident.

    Unaffordable housing is unamerican.

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  7. The Times is just regurgitating builder propaganda. There is plenty of space to build in this country.

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