Limits on Building Permits = Higher Home Prices

By Francis, David R. | The Christian Science Monitor, August 22, 2005 | Go to article overview

Limits on Building Permits = Higher Home Prices


Francis, David R., The Christian Science Monitor


In June, the term "housing bubble" was used 312 times in American magazines and newspapers. That's up sixfold from a year earlier.

If chatter alone pricked a price bubble, we'd hear a bang, or at least hissing.

But so far, no pop, no hiss. As of the second quarter of this year, home values in the United States were up 14.1 percent in the past year, reports David Berson, chief economist for Fannie Mae, a major buyer of home mortgages from financial firms.

His "best guess" is that home sales are "very close to peaking." In some hot housing markets, such as San Diego and Washington, homes are taking longer to sell. But prices aren't tumbling.

How come?

Blame today's high house prices, often staggering to first-time homebuyers, on the Federal Reserve's past "excessively easy" monetary policy, says veteran Wall Street economist Robert Parks. Low interest rates and the Bush administration's expansionary fiscal policy have created "an unprecedentedly big and dangerous bubble," warns Mr. Parks, who predicted the last two stock-market crashes. "All big bubbles burst. However, nobody can say just when."

Harvard University economist Edward Glaeser reserves judgment.

"It could happen," he says. "But I don't know."

His relative calm stems from research with two other economists indicating that the main reason house prices have flown aloft in the past 20 or 30 years, particularly on the two coasts, is the increasing difficulty in getting regulatory approval to build new homes.

That situation won't change anytime soon. Last week, the Census Bureau reported the July annual rate of housing starts as barely exceeding 2 million. That sounds like a lot, but the rate of growth in overall housing has fallen. In a sample of 120 metropolitan areas, the housing stock expanded 40 percent in the 1950s. In the 1990s, it rose only 14 percent. Further, housing growth in that decade was just about 7 percent in San Francisco, New York, and Los Angeles, notes Mr. Glaeser.

Cities have changed from "urban growth machines to homeowners' cooperatives," he notes. Developers probably are less able to "bribe" or otherwise get city officials to grant them zoning changes or permits for unpopular new housing. More affluent, more educated residents use their political clout to block such developments, which could damage their own house values or the beauty and convenience of their district.

In what Princeton University economist Paul Krugman has called the "flatland" (the Midwest), it is easier for builders to turn farms into housing than in the "zoned zone" (heavily zoned areas on the coasts), where it is generally hard to obtain land to build on. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Limits on Building Permits = Higher Home Prices
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.