If You Don’t Build It, The Price for All the Other Stuff With Increase

Lydia DePillis used the NYT’s ACS Explorer tool to contrast the rise in DC median incomes with the sharper rise in median rents. Here’s income:

Pretty good. And here’s rent:

Much stronger and more consistent.

And this right here is the social cost of restrictions on construction. In a world where the cost of housing is primarily determined by construction costs, then rising incomes should lead to housing costs falling as a share of income. But that’s not what’s been happening in DC or other successful American cities. Instead, the price of housing is being determined in large part by the implicit price of regulatory permission to build. That means rents rise as a share of income, and wealth is transferred to incumbent homeowners. This is a regressive transfer that also happens to be bad for the environment and bad for overall economic growth.