U.S. housing prices are on the rise, and yet fewer new homes are being built than in past cycles. One possible explanation is that more demand now focuses on city centers, where high land prices and zoning restrictions make it difficult to build.
The number of new construction residential property sales in urban cores was significantly higher in 2015 than in 2000, according to an analysis by construction services site BuildZoom. Meanwhile, sales of properties more than 10 miles removed from city centers were more than 50 percent below 2000 levels.
“The expensive cities tend to be shifting toward a paradigm that says having a better location is better than having a fresher, greener, newer place,” BuildZoom chief economist Issi Romem told the Wall Street Journal.
High land prices in urban cores have also pushed developers to build more luxury housing, not the affordable apartments needed to house a growing population of young professionals, the Journal reported.
Romem argued that cities can address the issue by loosening land-use restrictions. He pointed out that in cities with looser restrictions, such as Austin, starter home sales are on the rise. [WSJ] — Konrad Putzier