TY  - JOUR
AU  - Glaeser,Edward L.
AU  - Gyourko,Joseph
AU  - Saks,Raven
TI  - Why is Manhattan So Expensive? Regulation and the Rise in House Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10124
PY  - 2003
Y2  - November 2003
UR  - http://www.nber.org/papers/w10124
L1  - http://www.nber.org/papers/w10124.pdf
N1  - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu

Joseph Gyourko
University of Pennsylvania
Wharton School of Business
3620 Locust Walk
1480 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6302
Tel: 215/898-3003
Fax: 215/573-2220
E-Mail: gyourko@wharton.upenn.edu

Raven Molloy
Federal Reserve Board of Governors
20th and C Streets NW
Washington, DC 20551
E-Mail: raven.s.molloy@frb.gov
M2  - featured in NBER digest on 2004-03-01
AB  - In Manhattan and elsewhere, housing prices have soared over the 1990s. Rising incomes, lower interest rates, and other factors can explain the demand side of this increase, but some sluggishness on the supply of apartment buildings also is needed to account for the high and rising prices. In a market dominated by high rises, the marginal cost of supplying more space is reflected in the cost of adding an extra floor to any new building. Home building is a highly competitive industry with almost no natural barriers to entry, yet prices in Manhattan currently appear to be more than twice their supply costs. We argue that land use restrictions are the natural explanation of this gap. We also present evidence consistent with our hypothesis that regulation is constraining the supply of housing so that increased demand leads to much higher prices, not many more units, in a number of other high price housing markets across the country.
ER  -