Regulating home prices

It seems doubtless that building restrictions contribute in some measure to metro area property values but you need to keep the overall thesis in-check by considering additional points as well.

Contrary to popular belief, there have been a lot of residential units created in the Boston metro area during the last 10 years.

Whether it was new condo building construction (luxury lofts, conversions, etc), the condo-izing of mulit-family craze (I remember standing in a Porter Sq three family that had been gut rehabbed and divided into a 6 condo units!) or even new construction single families, supply expanded during the boom.

Although single families clearly weren’t produced in the closely held Boston suburbs at anywhere near the rate of say… Phoenix, Las Vegas or SoCals Inland Empire… one only needs to drive through Waltham or Billerica or Bedford to see that new construction singles were going up all over in towns inside 128.

Outside 128 (but inside 495) and outside 495 there was a great deal of building. (Toll, Hovnanian, etc)

The point is, its very hard to exactly quantify how prices are reflecting supply constraints when there is still new supply and alternatives available… markets are dynamic and buyers (and builders) adapt.

I think a better version of this type of analysis would be determining the effects that the perception of a better public school system has on the property values… my hunch is that it is VERY significant factor as family buyers essentially compete (by proxy) for vacancies in highly regarded school systems by outbidding each on their home purchase.

Not to change the subject but I would like to make a prediction for the next 2 monthly home sales and prices results.

During January and February I have noticed a dramatic drop off in the number of single family home sales being registered for the towns I follow closely (Arlington, Cambridge, Belmont, Lexington, Watertown.. etc.etc.) … I’m not talking seasonal drop off… these towns are registering numbers far below the lowest on record for these months… near single digit monthly sales…

I believe we will see dramatically lower regional home sales results for Jan and Feb with potentially higher median prices but significantly lower S&P/Case-Shiller results.

The median prices will jump simply as a statistical aberration coming as a result of there being so few homes sold… remember median is just the middle of the collection of actual sales so with so few sales the result can skew to one side or the other… I believe it will actually skew to the up side.

The S&P/Case-Shiller will continue to accurately report the repeat sale values declining significantly though.

This article contains a radical truth that so-called progressives in the Boston area must either acknowledge, disprove, or else admit to being utter hypocrites: we must decrease regulation if we are serious about creating more affordable housing.

The real problem is that most people in the Boston area, when they realize that increased growth (i.e. increased density and/or sprawl) is the only way to achieve affordable housing, vote against affordable housing.

Effectively, the population that owns housing in Boston metro area has said: "no more houses". The great irony of all this is that the people trying to buy more houses are the sons and daughters of current owners.

I liken it to a small village with 10 families and 10 huts. When the children of the 10 families have come of age, they ask their parents if they can build 10 more huts, but the parents refuse, telling the children move to another village elsewhere.

Of course, in Boston's case, the other village is New Hampshire, North Carolina, Florida, Texas...anywhere but Boston.

A hearty belly laugh. Reminiscent of Harvard's Joint Real Estate Center, always eager to produce "serious" academic research to support the talking points of its corporate patrons, including the NAR and others.

Eicher says demand doesn't justify high housing prices in Boston, therefore regulation must be to blame.

Here's how Eicher defines the components of housing demand: "income, population, and density."

Um, how about the largest credit bubble the world has ever seen? I suppose it's a sheer coincidence that Boston prices skyrocketed due to regulation while the entire rest of the planet saw prices rising due to the bubble?

Eicher's "study" is a tired retread of a stale talking point from the real estate developer lobby. Yes, yes, developers could make more money if we allowed them to flood the coasts by destroying wetlands, raise 45-story towers on residential side streets in Arlington, or slap up shoddy dwellings that exploded in fireballs whenever residents tried to plug in a TV. Poor, poor developers.

Sadly, Eicher never got the updated talking points. Today, building more residences and adding to the nation's already-historic overhang of vacant inventory is the last thing on developers' minds. All that credibility wasted for nothing.

So Boston and San Francisco have become much more expensive than Yuma, Arizona and Birmingham, Alabama over the last 17 years mainly because of government regulations? I question that conclusion.

Hell, I even felt the need to put the states after the last two cities.

Better a basement studio in Boston than a four bedroom house with a pool in Phoenix.

SoldAtTheTop, I'm sure your analysis of the numbers has been just as thorough and complete as a professor from the Univ. of Washington.

"I ran some numbers" doesn't give me much faith in your predictions ...

The selfishness of those who had houses (mostly boomers) and wanted their values to rise has come at the expense of those who could not afford housing comensurate with their incomes, or could only afford it by taking out these unsound loans (young people). The boomers who had houses were able to live high off the hog by pulling equity out of their houses, while charging extortionate rents to the young people who lived in their income properties. The large amount of housing which was developed in the recent boom was developed on the fringes of cities, guaranteeing huge emissions for years to come from the commuters living there, instead of in the cities where they would have been relatively green.

This is not a new trend. We have had 50 years of regressive urbanism thanks to the car, the highway, and the suburb. This study shows how the cities have helped out by trying to stamp out the lifeblood of cities, which is increased density. Go to Europe and you can see how pathetic our urban places really are. Now the government is ready to spend young people's tax dollars to prop up housing prices and keep them unaffordable. By this logic, the cities can justify their discriminatory and environmentally unfriendly zoning laws as a way of propping up prices for the have.

Unaffordable housing is a covert form of agism.