Smart Growth And Housing Bubbles

"Growth-management planning leads to rapid, artificial increases in the price of housing that can turn home buyers into speculators. Such speculation leads to housing bubbles that, when they burst, can impose huge costs on individual homeowners and the economy as a whole.

Such bubbles certainly exist in San Jose, Boston and other California and Northeast housing markets as well as those in a few other regions. Most regions suffering bubbles have used various forms of growth-management planning, while most regions that don't use growth-management planning appear safe unless there are other constraints on the land supply. While bubbles in Portland, Denver, and other smart-growth regions are not as severe as in San Jose or Boston, planners should be far more wary than they are of the likelihood that their policies will create such bubbles."