• Dan Sullivan posted a reply to jessfranco on ?The Housing crisis 1 month ago

    ?The Housing crisis

    Increased demand only drives land prices up, because the supply of land is fixed, and, as Adam Smith noted, “The rent of the land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price.” (Wealth of Nations, Book 1, Chapter 11 “On the Rent of Land”) It does not drive up the price of other goods unless they have a strong land component (such as oil or lumber). Consider silicon chips, which are all technology and have a trivial land and natural resource component. As demand rapidly rose, the price rapidly fell. For contrast, look at what happened to the price of Silicon Valley land (San Francisco Bay area, particularly the southern portion).

    The increase in housing costs are primarily due to increased land costs, and secondarily due to increased bureaucratic hurdles. Land value tax would free up a lot of land being held off the market, and streamlining England’s excessively meddlesome planning process would reduce the actual construction cost.