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Still not correct. Materials and labor costs dwarf regulatory costs, even in hot markets. The market does not inflate price, the market assigns value. In a hot
by lawnchair_larry 7y ago
Still not correct. Materials and labor costs dwarf regulatory costs, even in hot markets.
The market does not inflate price, the market assigns value. In a hot real estate market, prices are value-driven, not cost-driven. In quieter markets, where supply of land is high, and builders are not booked out 1-2 years in advance, prices are cost-driven.
- dzhiurgis 7y agoYeah but... Real estate market gets hot because of restricted supply... And supply is set by regulation, regardless of cost...
- lawnchair_larry 7y agoSupply is definitely not set by regulation.
- okcando 7y agoArtificially restricting supply seems to be the function of zoning laws and similar. If laws governing a property preclude the building of and usage as, say, high-density housing, then the supply of high-density has been restricted by regulation. Consequently, prices for property that has been enabled for high-density goes up. And because the demand for high-density housing is driven by the greater pool of demand for housing of all kinds and there's less housing overall to go around, the price of low-density housing also goes up. I don't know what's going on in any particular place but the potential for regulations to affect supply and demand is clearly there.