The Asymmetrical Growth of Housing Prices: The Impact of Regulation

Abstract

The growth of housing prices in the United States has been asymmetrical over the past decade, especially so in metropolitan statistical areas (MSAs). This piece conducts five separate regression analyses in order to determine the factors contributing to this asymmetrical rise in housing prices. Analysis of the data reveals that housing prices are, in fact, rising disproportionately in different areas and factors like the level of regulation, the increase in employment, and the increase in population contribute to the rise in housing prices. The variables representative of income and rental prices were not found to be impactful in increasing housing prices. This piece further describes some possible ways to combat the massive increase in housing prices in MSAs with strict regulations on housing and high demand in the market.