The Bad News About Rising Home Prices

Economists see America's recovering housing market as a positive indication of the country's economic health. But according to a new study, rising home prices "decrease income mobility and ultimately hurt the U.S. economy," reports Nicole Goodkind.

The study, authored by Daniel Shoag, associate professor of Public Policy at Harvard's Kennedy School, and colleague Peter Gangong, concludes that the high cost of housing in cities like New York and San Francisco are forcing low-skilled workers to migrate to cities like Las Vegas and Phoenix, increasing income inequality and slowing economic growth.  

What is to blame for the stagnant rate of income convergence? "An increase in land regulation in high-wage states and cities discourage development that would lower housing prices," says Shoag.

"It's surprising that local regulations can have such a big macroeconomic impact...that they can affect this process of income migration and conversion, which are long-standing macroeconomic relationships," he notes.

"Policies, however, can be reversed: Shoag has already been contacted by lawmakers in Washington in hopes of figuring out how to encourage new, affordable developments in high-wage places," adds Goodkind.

 

Full Story: Home Prices Push Low-Wage Workers Out of Cities

Comments

Prepare for the AICP Exam

Join the thousands of students who have utilized the Planetizen AICP* Exam Preparation Class to prepare for the American Planning Association's AICP* exam.
Starting at $199
Planetizen Courses image ad

Planetizen Courses

Advance your career with subscription-based online courses tailored to the urban planning professional.
Starting at $14.95 a month
Book cover of Contemporary Debates in Urban Planning

Contemporary Debates in Urban Planning

Featuring thought-provoking commentary and insights from some of the leading thinkers and practitioners in the field.
$18.95
Woman wearing city map tote bag

City Shoulder Totes

Durable CityFabric© shoulder tote bags available from 5 different cities.
$22.00