No housing bubble?

Among the more lucid comments on the issue of yes/no housing bubble, here.

No it is not a bubble- or rather only a bubble in a few places, and a few categories. The problem is that in some nice areas we are simply running out of land, often as a result of government restrictions on development. Fundamentals have changed, one such fundamental being that government restrictions on development are biting. In places like Texas, where there is not much restriction, prices remain stable at long term levels.

It would be useful to find out if that last statement -- "In places like Texas, where there is not much restriction, prices remain stable at long term levels. -- is generally true.  I can already think of what appear to be exceptions like Las Vegas and Phoenix(?), where there appears to be plenty of land and yet there has been a sharp run-up in values. But I wouldn't be surprised if the correlation, if not causality, is there.

In any case, I wouldn't call it a bubble but a fundamental shift in values. And where else would such a new equilibrium of fundamentals first logically manifest itself but in California.

Comments

[Brian Miller]

So, not meaning to put words in the mouth of your source, are we to assume that the only proper public policy is to encourage more and more people crammed into a place-especially a place likek California which has serious long term water supply issues (absent a miracle low energy desalination process) Since they will all be driving single occupancy vehicles, who is going to pay for the transportation infrastructure? The water? How is the air going to remain breathable?

I know it is unAmerican to acknowledge that yes, there may be limits.

[David Sucher]

The issue is buyers' perception and why they feel it wise/needed to keep bidding up the price of houses. A sense of scarcity is the key and that has nothng to do with whether environmental rules are wise or not.
Such growth limits -- again, whether wise or not -- do (or at least can) create a psychological sense of limits. Hello! That's why they are called "limits to growth."

[miss representation]

http://www.chron.com/cs/CDA/ssistory.mpl/side2/3172096

Seems to indicate the poster is correct -- at least as far as costs go. But it's not necessarily a matter of space restrictions. Houston, lacking zoning of any kind, is flat, and not stable (since inflation is eroding value). Also, consider the lack of buyer recourse in Texas the case of poor workmanship also likely devalues existing stock, which quickly reveal shoddy construction. So, yes, outside of Texas, the interventionist gubmen is doing things like protecting home buyers from poor construction, and often even aids in the appreciation of one's investment. In Tejas, you buy a house that is likely to be overrun with mold shortly, and even if it isn't, will begin to devalue immediately, since flat prices don't keep up with inflation. Yee Haw.

[Greg Bartell]

What's the coorelation to transportation availability? I know in Texas they dont mind funding and building roads. As soon as there is a new area developed, there is a freeway going there. Is this true too in Las Vegas and Phoenix?
I know this one of the problems in Seattle, where the "drive till you qualify" method of buying real estate prevails. For each mile form the urban core, prices for the same house decline by thousands of dollars. The nice 2 bedroom house in Wallingford is $400,000+, and the nice 2 bedroom house in Shoreline is maybe $300,000.

[Mark]

"I can already think of what appear to be exceptions like Las Vegas and Phoenix(?), where there appears to be plenty of land and yet there has been a sharp run-up in values."

Would you really consider Las Vegas to offer plenty of land? How much of all that land is usable or developed? Irrigation, etc needs to be provided before superfluous land is as desirable as existing real estate. I'd assume the same might hold for Phoenix, climate-wise.