Deregulating the housing market would expand homeowners’ options, allow empowering choice between minimal dwellings and affordable “dream homes”

Economics professor Bryan Caplan theorizes in EconLlib that a fully deregulated housing market would encourage construction in urban and suburban areas. Combating the refrain that nobody wants to live in cities, Caplan explains that deregulation enables choice; if construction increases, housing prices decrease, and local individuals and families make priority-based decisions from a range of options.

Current regulation strangles urban construction, and heavily restricts suburban construction.  If you got rid of this regulation, skyscrapers really would start going up all over high-priced cities – and millions of urban commuters would swiftly relocate to occupy these new buildings.  Families with children would naturally be less eager to go urban, but even they might be tempted by large, cheap apartments across the street from their jobs.

Plenty of other folks would respond by moving into all of the newly vacant – and suddenly cheap – suburban homes.  This could conceivably fully satisfy suburban demand, but the more likely result is that developers would also take advantage of deregulation to subdivide existing lots and build lots more single-family homes.  And of course, other developers would buy up neighborhoods of old single-family homes, bulldoze them, and replace them with massive cheap apartment complexes.

“People don’t want to live like that”?  That depends on the price.  Deregulation doesn’t just make dream homes affordable.  It also allows people to settle for ultra-cheap, so-so housing and spend the savings on their higher priorities.  Whatever they may be.

Read the whole thing here.

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Image by Daryl Mitchell