The Housing Boom and Bust: Where Was Planning?

It was the collapse of the housing bubble that triggered the current economic crisis.  As is the case in the aftermath of many calamities finger pointing abounds. There are an ample number of would be culprits. Take your pick; The Federal Reserve for keeping interest rates too low, mortgage brokers for pushing inappropriate loans, ratings agencies for blessing dubious securities, the list goes on.  A common criticism aimed at all of these culprits is that they lacked the foresight to see the inevitable housing bust. It was the housing bubble that camouflaged all of the bad decisions.

3 minute read

June 5, 2009, 12:19 PM PDT

By Lance Freeman


It was the collapse of the housing bubble that triggered the current economic crisis.  As is the case in the aftermath of many calamities finger pointing abounds. There are an ample number of would be culprits. Take your pick; The Federal Reserve for keeping interest rates too low, mortgage brokers for pushing inappropriate loans, ratings agencies for blessing dubious securities, the list goes on.  A common criticism aimed at all of these culprits is that they lacked the foresight to see the inevitable housing bust. It was the housing bubble that camouflaged all of the bad decisions.

With few exceptions
planning as a profession has been notably absent from any assignment of blame.  This is in some ways odd. Perhaps more than
any other profession planning is about looking toward the future and taking
actions to prepare for it.  And while the
aftermath of the housing bust has concentrated our minds on the world of
finance, it is in local housing markets where the housing bubble started.  Moreover, in many places the bubble was
accompanied and abetted by a speculative building boom.  Certainly it should be within the purview of
the planning profession to identify speculative housing booms.  Isn't gauging future housing demand relative
to oncoming supply a fundamental responsibility of local housing departments?
Finally, a study by Glaeser,
Gyourko, and Saiz
suggests that the ease with which new housing can be
built, something planners heavily influence, affects the trajectory of housing
bubbles.  More specifically, they found
that during the 1980s housing bubble places where it was easier to build for
the most part escaped the big run up in housing prices.  And during the most recent housing bubble of
this decade they found that the rise and crash of housing prices happened over
a shorter period of time in places where the housing supply could be increased
more easily.  Their findings suggest the
actions of planners do affect housing bubbles.

In sum, through their projections and forecasting planners
should have been among the first to recognize the risk of a housing bubble in
certain housing markets.  Furthermore,
many of the standard tools used by planners such as zoning and control of the
permitting processes have been shown to influence the course of local housing
bubbles.  These arguments point to a need
among the planning profession for introspection with the regard to the role
planning played or did not play in the recent housing bubble and bust.  I'd also like to hear more from local planners
who may have recognized a bubble in their communities and the action they tried
to take in response. 

In the aftermath of the recent housing debacle it is not
only economists that should be reviewing their profession's assumptions and
actions.


Lance Freeman

Lance Freeman is an associate professor in the Urban Planning program at Columbia University in New York City where he teaches courses on housing policy and research methods. He has also taught in the School of Urban Affairs and Public Policy at the University of Delaware. Prior to this, Dr. Freeman worked as a researcher at Mathematica Policy Research, a leading social policy research firm in Washington D.C. Dr. Freeman holds a Masters degree and a Ph.D. in City and Regional Planning from the University of North Carolina at Chapel Hill. Dr.

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Map of Haussmann's redesign of Paris in the 1850s through 1870s under Napoleon III.

In Urban Planning, AI Prompting Could be the New Design Thinking

Creativity has long been key to great urban design. What if we see AI as our new creative partner?

June 30, 2025 - Tom Sanchez

Red and white "Wildfire Evacuation Route" sign on signpost.

Cal Fire Chatbot Fails to Answer Basic Questions

An AI chatbot designed to provide information about wildfires can’t answer questions about evacuation orders, among other problems.

4 hours ago - The Markup

Protester at Echo Park Lake, Los Angeles holding sign that says "Housing is a human right"

What Happens if Trump Kills Section 8?

The Trump admin aims to slash federal rental aid by nearly half and shift distribution to states. Experts warn this could spike homelessness and destabilize communities nationwide.

5 hours ago - Shelterforce Magazine

Aerial of rainbow painted crosswalks at large intersection in Castro District, Sna Francisco, California.

Sean Duffy Targets Rainbow Crosswalks in Road Safety Efforts

Despite evidence that colorful crosswalks actually improve intersection safety — and the lack of almost any crosswalks at all on the nation’s most dangerous arterial roads — U.S. Transportation Secretary Duffy is calling on states to remove them.

6 hours ago - Streetsblog USA

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.

Home and Land Services Coordinator

Appalachian Highlands Housing Partners

Associate/Senior Planner

Gallatin County Department of Planning & Community Development

Senior Planner

Heyer Gruel & Associates PA

Write for Planetizen