Alex Tabarrok points out “an excellent article on the housing market based around a discussion of the development firm Toll Brothers,” which explains why U.S. housing prices might continue to rise:
In Britain you pay seven times your annual income for a home; in the U.S. you pay three and a half.’ The British get 330 square feet, per person, in their homes; in the U.S., we get 750 square feet. Not only does Toll say he believes the next generation of buyers will be paying twice as much of their annual incomes; in terms of space, he also seems to think they’re going to get only half as much. ‘And that average, million-dollar insane home in the burbs? It’s going to be $4 million.
Increasing regulation restricts the housing supply and drives up prices — and communities are more likely to regulate new construction if they don’t benefit from it:
European towns also have less incentive to encourage development, Wachter says, because they generally do not, unlike their American equivalents, depend on their local tax base to pay for education and services, which tend to be federalized.
Definitely read the whole article.