A dearth of new homes and expanding housing demand cause high inflation in the housing market. Even though Denver, Austin, and Seattle had higher demand growth than any California metro, rent in those cities grew less rapidly. Had California implemented measures to accommodate growing demand as the rest of the country does, its residents would now be paying less in rent. This article considers a counterfactual thought experiment: how would California’s housing market be different today if a policy currently under consideration in the California Senate—SB 827, which would allow new residential building along public transit corridors—had been implemented six years ago? I estimate that rent would be 5.8 percent lower in San Francisco, a savings of $266 per month on the median home, and 4.2 percent lower in Los Angeles County, savings of $124 per month.
Mercatus Center
April 2018
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