San Freattle Washifornia

The Ole Perfesser:
WHO'DA THUNK IT? Regulation drives up home prices: "Between 1989 and 2006, the median inflation-adjusted price of a Seattle house rose from $221,000 to $447,800. Fully $200,000 of that increase was the result of land-use regulations, says Theo Eicher — twice the financial impact that regulation has had on other major U.S. cities." Maybe it's not a housing bubble at all, but a regulation bubble?
Heh. Or maybe it's the water.

Downtown Seattle is in the middle, at the narrowest point between Puget Sound to the west and Lake Washington to the east. The geographical restrictions to limitless suburban expansion in that regions simply dwarf most negative effects of the Urban Growth Boundary. You just can't build a megahighway across the Sound or suburban development up the steep slopes of the Cascades.

Similarly, government regulation does not affect housing prices in the absence of demand. Portland, Seattle's little sister, had an urban growth boundary when homes were dirt cheap back in the 80s. No one wanted to live there back then because the timber crisis led the economy into a recession. The region recovered significantly in the 90s and housing prices rose as people started to move in from elsewhere.

All the while there is a segment of the population that complains bitterly about how much it costs to buy that spacious house with a generous lot size. Boy if only we could make this place look like Omaha! They find a place like that--see the red dots outside the urban growth boundary above--and shortly thereafter demand to be included within the boundary so that they can benefit from better schools, roads, and other services. Which are the result of regulations.

Does the urban growth boundary affect housing prices? Sure it does! Just so happens that more people prefer to live there than, say, Knoxville TN which knows no bounds to sprawl.