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The reason that housing is increasing in cost is because of a market failure where politics is used to create housing scarcity, called "economic rents." In this case, the use of politics to create zoning laws that place artificial restrictions on housing density. As in any form of "economic rents", this benefits a special interest group -- in this case the landlords over the general population of rents and buyers of houses.

In another case of politics creating scarcity was the artificial limit of 13,000 taxi medallions in NYC. Uber/Lyft fixed this scarcity by increasing the supply of taxi-like vehicles while lowering the cost of taking these vehicles. The price of a taxi medallion was $1.2 million prior to Uber/Lyft is now $700,000. With the political restriction on taxi medallions effectively eliminated, the "taxi landlords" lost out and the consumer gained.

London, NYC, DC, Boston, LA, SD, SF and other cities all have these restrictive zoning laws that artificially limit density to increase housing costs.

Economics Nobelest and NYTimes columnist Paul Krugman has discussed this.

Harvard Economist and city expert Edward Glaeser has written extensively on this topic. Financial Times columnist (with a BS and MS in Economics from Oxford) addresses this topic in "The Undercover Economist." He discusses how in the 1930's London had Green Belt (park) surrounding the city installed which has resulted in increased housing prices for landlords. But bad zoning laws that limit housing density has also contributed.

See: Edward Glaeser: Build Big Bill http://www.nydailynews.com/opinion/build-big-bill-article-1....

Tim Harford: The Undercover Economist (2nd Ed). This book has sold over 1 million copies https://www.amazon.com/dp/0199926514/

David Ricardo explained this in 1817. David Ricardo: On the Principles of Political Economy and Taxation http://www.econlib.org/library...

See Ch 2.3 - 2.5




The zoning story is pretty much bullshit and is told by developers that want to replace the buildings with even lower density, shittier but still pricier buildings.

The Eixample district in Catalonia has one of the highest population densities in the western world without high-rises: https://en.wikipedia.org/wiki/Eixample Its population density is higher than the one in Manhattan and probably also any parts of the other cities you listed. It didn't achieve that by ditching zoning laws.


Actually, if you read the references by the economists that I cite, in most situations the developers want to maximize profits which means building for higher density. In much of Manhattan, for example, there are many areas with low 6 story brownstones that could be replaced by higher towers, but the zoning laws don't permit this. In London, where I have lived for about 6 months altogether and in the American cities I mention, the issue is bad use of land because of poor zoning codes.

I lack the experience to comment on the situation that you mention relating to Catalan.




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