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The High Costs of Housing Development: It's Complicated

The high costs of housing development do not fit a convenient narrative, according to new analysis by Jenny Schuetz from the Brookings Institution.
January 24, 2020, 5am PST | James Brasuell | @CasualBrasuell
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Jenny Schuetz lays out both sides of one of the core debates in planning in 2020:

Public debate falls into two schools of thought as to why housing costs are so high in many parts of the U.S. The YIMBY (“Yes In My Backyard”) school argues that housing is expensive because local governments—and voters—have adopted overly restrictive land use regulations that limit the construction of new housing. On the other hand, left-leaning politicians like Bernie Sanders contend that housing is expensive because “corrupt real estate developers are gentrifying neighborhoods.”

To find some clarity amid these conflicting versions of a story that matters to every American, Schuetz identifies facts about "the financial ecosystem of housing development, and discuss the ways land use regulations affect development decisions."

As an immediate example of the complications that arise when moving beyond simplistic explanations, Schuetz's list of participants in the ecosystem of the housing industry goes beyond developers and homeowners to include landowners, brokers, construction lenders, and home builders.

A clear and easy-to-understand explanation of these roles in the process of residential development follows—so the article could be construed as an explainer, demystifying a complex topic, rather than just drawing attention to the complexities of the process.

Other concepts explored in the article include a discussion of the time value of money, regulatory barriers, and risk—so the article sill explicitly and implicitly builds a case for regulatory reform.

Full Story:
Published on Friday, January 17, 2020 in Brookings
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