Understanding the housing market

Folks who oppose development often have some theories that are dramatically at odds with both economic theory and commonsense. “Building dense new housing doesn’t bring prices down because there’s an inexhaustible supply of foreign buyers wanting to purchase houses at inflated prices and keep them empty” isn’t a very sound economic theory. But folks who are pro-development often don’t exactly use the most sophisticated economics themselves. “Supply and demand” isn’t so much “Econ 101” as “the back cover of the Econ textbook you never opened”.

In this section, we aim to add a missing middle to the conversation, something between a detailed academic course on housing economics and the cartoonish versions heard in many local housing debates. In this area, we try to understand the incentives and constraints that housing developers and consumers face, as well as the real costs of housing construction at all scales.

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