How Urban Planning caused the housing bubble

Posted on October 13th, 2009 by admin

The local association of Realtors sent out a link to an analysis from the Cato Institute titled How Urban Planners Caused the Housing Bubble. Randall O’Toole does a thorough analysis of the data and provides a pretty severe indictment of Growth Managment as a driver of volatile housing prices.

He uses economic theory, looking at elasticity of supply and demand, to explain how price volatility is achieved by growth management and then he looks at data of urban areas across the country to confirm the relationship between planning approaches and housing volatility in the latest housing bubble.

The correlation between planning practices and pricing volatility is uncanny! Fed policy, the Community Reinvestment Act and other hair brained political practices can’t explain the phenomenon without the inclusion of growth managment into the equation. The costs for growth managment are also staggering! For real estate nerds, it is required reading!