Watchhttp://capefearbusiness.com/?p=8757
Randal OToole is an observant fellow. A senior fellow at the Cato Institute, OToole took a close look at the Great Recession and its antecedent, the Great Housing Bubble, and saw something that few others did. After a lengthy period of only gradual increase in the average inflation-adjusted price of American homes, the price began growing at 4 percent a year in 1995. By 2004, the annual rate of growth was 7 percent. By 2006, average U.S. housing prices had skyrocketed by 61 percent. Then they came crashing down a 40 percent drop by mid-2011. Families saw their net worth...
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Certainly in NYC and SF building restrictions amplified the bubble upswing. O'Toole counts >50% upswing followed by >10% downswing as a bubble, so they probably make his list because the downswing was briefly 20% before the Fed began "helping homeowners." They never had the 50% drop that occurred in other places though. In general, places like Houston allow almost limitless construction, so price/income ratios remain reasonable and I can believe they are less likely to experience housing bubbles. Sacramento had a huge bubble and bust, though I don't know what their building restrictions look like.
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This isn't really news. We've known this for years. Given that ANY sort of new construction in places like the Bay Area- whether it be houses, trains, freeways, or whatnot is met with fierce NIMBYist protests means nothing new is ever built and thus the supply of housing remains increasingly precious.
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Chico, CA
California probably has the most restrictive building restrictions of all, especially in the coastal areas. In many coastal areas there are voter approved moratoriums in place on the number of new houses that can be built, or that farm land can not be converted to residential use. And in some areas it's already so crowded that they are completely out of land to build on at all.
If you try to build a house anywhere in California, even if you have land, you will be subjected heavy permit fees, school fees, park fees, and many other impact fees. These fees raise the cost of building a house anywhere from $30,000 on up (this money you have to pay the county or city before you pound the first nail). Then there are the California required fire sprinkler systems, energy and many other requirements that also add tens of thousands of dollars in costs.
But on the bright side there are still places in the USA where you can build with no permits or requirements.