Supply constraints do not explain house price, quantity growth across US cities

Main claim of the paper (as discussed)

• Thread summary of the paper: across US metros, growth in incomes explains house price growth much better than measures of local supply constraints / regulatory restrictiveness.
• Finding is interpreted as: easing land-use regulation alone may not deliver big affordability gains, especially for single-family homes.

Critiques of methodology and scope

• Paper focuses mostly on single-family homes, not rentals or multifamily, which commenters note are where supply constraints bite hardest in dense cities.
• Time window (1980–2020) misses the dramatic downzoning and capacity cuts pre‑1980, so cross‑metro “regulatory variation” since 1980 may be too small to detect.
• Little explicit treatment of the Great Recession and post‑2008 credit tightening, which some see as a major, unmodeled “kink” in both demand and supply.
• Reliance on broad indices like WRLURI is criticized as too crude to capture the specific “regulatory hydra” (lot sizes, height limits, permitting timelines, etc.).

Supply, demand, and market behavior

• Multiple commenters argue: “supply doesn’t matter” is an overreach; more accurate reading is “measured regulatory strictness explains less than expected.”
• Others stress that demand (income, credit, preferences) and supply interact:
  • Without enough supply, available stock is bid up to what incomes + banks allow.
  • New supply often comes at the luxury end, with affordability gains only via filtering over decades.
• Housing demand is seen as very inelastic (most households need exactly one unit and will sacrifice a lot to keep it), which weakens textbook price responses.

Land, zoning, and geography

• Strong thread asserting it’s fundamentally land value, not structures: land is fixed and captures most of the surplus from income growth and amenity improvements.
• Counterpoint: effective “land per dwelling” is not fixed; zoning and allowed density determine how many households share the same land.
• Many examples raised (Tokyo, Austin, Houston, various US suburbs) where upzoning or easier permitting is believed to have tempered prices or rents, suggesting regulation still matters even if this paper finds weak statistical links.

Credit, investors, and financialization

• Several argue the key constraint is credit supply / mortgage standards, not physical supply: more lending capacity raises effective demand.
• Debate over institutional buyers / private equity:
  • One side: they’re just another class of buyer; their share is overstated and removal wouldn’t “fix” prices.
  • Other side: they have cash advantages, can hold units vacant, and concentrated ownership can support higher rents and prices.
• Appraisal practices and past no‑doc lending are mentioned as mechanisms that helped ratchet prices up in prior cycles.

Housing as asset and political economy

• Recurrent theme: housing is the core wealth store for middle (and much of lower) class; large falls in prices would be politically explosive.
• This entrenches NIMBY politics: homeowners resist upzoning and new supply that might threaten valuations.
• Several note that prices in many cities track local productivity and income, with timing of market entry (when you bought) more important than current salary.

Policy ideas and disputes

• YIMBY vs. “building isn’t enough”:
  • Some use the paper to argue against “just build more” as a simplistic fix.
  • Others warn NIMBYs will misuse it; they maintain that large, citywide increases in supply still clearly reduce or cap prices.
• Land value tax / Georgism gets significant support: seen as a way to push land into more productive use and curb speculation; critics worry about sprawl or implementation challenges.
• Other suggestions: higher taxes on rental income or SFH rentals, progressive wealth or land taxes, disaster‑resistant building standards, and broader redistribution to reduce extreme wealth‑driven asset demand.