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Why Have Housing Prices Gone Up?Edward L. GlaeserHarvard University - John F. Kennedy School of Government, Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER) Joseph GyourkoUniversity of Pennsylvania - Real Estate Department; National Bureau of Economic Research (NBER) Raven E. SaksU.S. Federal Reserve - Division of Research and Statistics February 2005 Harvard Institute of Economic Research Discussion Paper No. 2061 Abstract: 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.
Number of Pages in PDF File: 36 working papers seriesDate posted: February 1, 2005Suggested CitationContact Information
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