Expensive Housing Prices Mean Slow or No Growth

Harvard Professor Edward Glaeser reports on growth and non-growth:

The National Association of Realtors tells us that the median sales price in 2006 in Los Angeles was $585,000 dollars and $775,000 dollars in San Jose. Meanwhile the median sales price in Houston and Dallas in 2006 was $150,000 dollars and the median sales price in Atlanta was $170,000 dollars. Low housing prices imply that demand isn't too hot.

Moreover, these places are not particularly productive. Median family incomes in Houston and Dallas are less than $40,000, while America's average is $55,000 dollars. Income levels in the surrounding counties are higher, but still less than the American average.

So why are these Sunbelt places growing ? It is because they build vast amounts of housing. Houston may not have great summers or high productivity, but it does know how to build new homes.

Last year, the Houston metropolitan area allowed 71,000 building permits. Since the number of homes essentially determines the number of people in a community, Houston's fondness for development drives its population growth.

The growth of places like Houston, Phoenix, and Las Vegas is a reaction to the fact that starting in the 1970s, coastal California became far less willing to permit new housing.

A growing environmental movement, typified by the movement to "save" San Francisco Bay, stopped new construction close to the coasts. The Supreme Court of California supported this movement with seemingly pro-environment rulings, like Friends of Mammoth.

Some places want a middle class.Others like unions,land use restrictions and a hatred for those who aren't rich or poor.