Looks like they considered the land scarcity angle. Albert Saiz’s (2011) work on geography and housing supply shows that where geography, like water and hills, constrains building, prices are higher. He also finds that measures of housing regulation predict less building and higher prices. But lack of land can’t be the whole story. Many expensive parts of America, like Middlesex County Massachusetts, have modest density levels and low levels of construction. Other areas, like Harris County, Texas, have higher density levels, higher construction rates and lower prices. Across Massachusetts towns, Glaeser and Ward (2009) found that there was more construction in places, like Chelsea and Revere, with higher initial density levels and modest prices. If land scarcity was the whole story, then we should expect houses on large lots to be extremely expensive in America’s high priced metropolitan areas. Yet typically, the willingness to pay for an extra acre of land is low, even in high cost areas. We should also expect apartments to cost roughly the cost of adding an extra story to a high-rise building, since growing up doesn’t require more land. Typically, Manhattan apartments are sold for far more than the engineering cost of growing up, which implies the power of regulatory constraints (Glaeser, Gyourko and Saks, 2005). 40 Percent of the Buildings in Manhattan Could Not Be Built Today "Because They Are Too Tall ... Or They Have Too Many Apartments ... Or Too Many Businesses ..."The primary alternative to the view that regulation is responsible for limiting supply and boosting prices is that some areas have a natural shortage of land.
Ah, so they did. I'm not sure that excuses their use of Vegas in the sentence I quoted, though. And Middlesex, for example, has plenty of cachet. Does it count as regulation if a lot of the families have been in the area for 200 years and are vehemently opposed to change? Neighborhood associations regulate, but every one is a bit different and I don't really know where those rules come from. Are they saying that demand is low, so supply is lower, so the price falls? I'm confused by those two sentences together. Houses on large lots near downtown aren't expensive? Or don't exist? How do we parse out the fact that money has fled from downtown neighborhoods in many major cities?If land scarcity was the whole story, then we should expect houses on large lots to be extremely expensive in America’s high priced metropolitan areas. Yet typically, the willingness to pay for an extra acre of land is low, even in high cost areas.