It’s surprising that they took measurements at 2000 and 2020 and did not mention the Great Recession at all, which severely reduced ability of households to get a mortgage and disrupted both demand and supply. I don’t think their attempt to control for the “kinked” supply curve by dropping the bottom 25% of metros by income growth is sufficient to eliminate metros that were devastated by the Great Recession.
Also, I am not sure whether comparing to median value of constraint index (e.g. Wharton residential land use regulation index) is a particularly good way to categorizing metros into constrained and unconstrained, since it’s hard to know which specific constraints of the “regulatory hydra” are important for future development (https://twitter.com/TheJakeSchmidt/status/157220787234744729...). One metro may need to reduce minimum lot sizes to allow the next increment of development, whereas another metro may need to allow lot mergers and relax density limits instead.
So I think this paper is basically concluding that land use constraints are harder to measure than income growth.
It's also interesting to note that the guest identifies lack of supply as the other key thing to fix, but finds that the idea that YIMBY policies could actually be put in place too politically infeasible to consider.
Yes, Kevin Erdmann’s writings were what I was thinking of when I said that lending has been restricted since the Great Recession. He does identify “Closed Access” supply restrictions as the original sin that the Fed misinterpreted as a speculative bubble. I highly recommend his blog and books.
Also, I am not sure whether comparing to median value of constraint index (e.g. Wharton residential land use regulation index) is a particularly good way to categorizing metros into constrained and unconstrained, since it’s hard to know which specific constraints of the “regulatory hydra” are important for future development (https://twitter.com/TheJakeSchmidt/status/157220787234744729...). One metro may need to reduce minimum lot sizes to allow the next increment of development, whereas another metro may need to allow lot mergers and relax density limits instead.
So I think this paper is basically concluding that land use constraints are harder to measure than income growth.