Why is Manhattan So Expensive? Regulation and the Rise in House Prices
In Manhattan and elsewhere, housing prices have soared over the 1990s. Rising incomes, lower interest rates, and other factors can explain the demand side of this increase, but some sluggishness on the supply of apartment buildings also is needed to account for the high and rising prices. In a market dominated by high rises, the marginal cost of supplying more space is reflected in the cost of adding an extra floor to any new building. Home building is a highly competitive industry with almost no natural barriers to entry, yet prices in Manhattan currently appear to be more than twice their supply costs. We argue that land use restrictions are the natural explanation of this gap. We also present evidence consistent with our hypothesis that regulation is constraining the supply of housing so that increased demand leads to much higher prices, not many more units, in a number of other high price housing markets across the country.
|Date of creation:||2003|
|Date of revision:|
|Contact details of provider:|| Postal: 200 Littauer Center, Cambridge, MA 02138|
Web page: http://www.economics.harvard.edu/journals/hier
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Early, Dirk W. & Olsen, Edgar O., 1998. "Rent control and homelessness," Regional Science and Urban Economics, Elsevier, vol. 28(6), pages 797-816, November.
- Gyourko, Joseph & Linneman, Peter, 1989. "Equity and efficiency aspects of rent control: An empirical study of New York City," Journal of Urban Economics, Elsevier, vol. 26(1), pages 54-74, July.
- Hamilton, Bruce W., 1978. "Zoning and the exercise of monopoly power," Journal of Urban Economics, Elsevier, vol. 5(1), pages 116-130, January.
- Antonio Ciccone & Robert E. Hall, 1993.
"Productivity and the Density of Economic Activity,"
NBER Working Papers
4313, National Bureau of Economic Research, Inc.
- Henry O. Pollakowski & Susan M. Wachter, 1990. "The Effects of Land-Use Constraints on Housing Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 315-324.
- Fujita,Masahisa, 1991.
"Urban Economic Theory,"
Cambridge University Press, number 9780521396455.
- Edward L. Glaeser & Joseph Gyourko, 2002.
"The Impact of Zoning on Housing Affordability,"
NBER Working Papers
8835, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Joseph Gyourko, . "The Impact of Zoning on Housing Affordability," Zell/Lurie Center Working Papers 395, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
- Edward L. Glaeser & Joseph Gyourko, 2002. "The Impact of Zoning on Housing Affordability," Harvard Institute of Economic Research Working Papers 1948, Harvard - Institute of Economic Research.
- Katz, Lawrence F. & Rosen, Kenneth T., 1987.
"The Interjurisdictional Effects of Growth Controls on Housing Prices,"
3442758, Harvard University Department of Economics.
- Katz, Lawrence & Rosen, Kenneth T, 1987. "The Interjurisdictional Effects of Growth Controls on Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 149-60, April.
- James M. Poterba, 1983. "Tax Subsidies to Owner-occupied Housing: An Asset Market Approach," Working papers 339, Massachusetts Institute of Technology (MIT), Department of Economics.
- Goodman, John Jr. & Ittner, John B., 1992. "The accuracy of home owners' estimates of house value," Journal of Housing Economics, Elsevier, vol. 2(4), pages 339-357, December.
- Edward L. Glaeser & David C. Mare, 1994.
"Cities and Skills,"
NBER Working Papers
4728, National Bureau of Economic Research, Inc.
- Benson, Earl D, et al, 1998. "Pricing Residential Amenities: The Value of a View," The Journal of Real Estate Finance and Economics, Springer, vol. 16(1), pages 55-73, January.
- Kanemoto, Yoshitsugu, 1980. "Theories of urban externalities," MPRA Paper 24614, University Library of Munich, Germany.
- Linneman, Peter, 1987. "The effect of rent control on the distribution of income among New York City renters," Journal of Urban Economics, Elsevier, vol. 22(1), pages 14-34, July.
When requesting a correction, please mention this item's handle: RePEc:fth:harver:2020. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If references are entirely missing, you can add them using this form.