By Justin Hatherly, McGill University
Many major American cities such as San Francisco and New York have faced a growing housing affordability crisis as housing costs surge to levels that place a severe strain on middle- and lower-income residents. The primary cause of inflated housing costs in certain jurisdictions is the plethora of land-use regulations (LURs) imposed by some American local governments. LURs restrict how or whether land can be utilized for construction and development. An excess of these regulations can induce local housing scarcities. By leading to higher housing costs, LURs discourage interregional migration by making economically growing cities prohibitively expensive to live in for low- and middle-income workers. Less migration to economically vibrant cities contributes to lower economic growth and national economic welfare.3 Moreover, housing costs spurred by excessive LUR increase political pressure on state and local governments to adopt other economically damaging public policies, such as rent control.
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