Housing Restrictions Hit Harder Than Tariffs

By David R. Henderson. Excerpts:

"Exhibit A is the state and local government restrictions on building housing. Here’s what I wrote in my review of Bryan Caplan’s graphic novel Build, Baby, Build:

A conservative estimate, states Caplan, again backing it up with data in the footnotes, is that housing deregulation would reduce the cost of housing by approximately 50 percent. Because housing costs are about 20 percent of the average American household’s budget, the cost of living would be 90 percent of what it is now, which means that the standard of living would increase by 11 percent (100 divided by 90 = 1.11.)"

"Caplan, in Build, Baby, Build, quotes the following from Krugman:

High housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building height in the cities, zoning that blocks denser development in the suburbs, and other policies constrict housing on both coasts.

Krugman also notes, “Meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low.”"