I posted this answer at the end of the thread that brought up this topic (“Did High Tech Incomes…”). I see that it’s now spawned a new thread, so I’m going to re-post it here, just to make it visible:
Powayseller asked…
“On a related note, why did SD housing prices rise higher than Austin’s?”
My answer has been and will be all along: zoning and building restrictions. This is the only thing that all bubble areas have in common, and differ markedly from non-bubble areas. Income gap? No, look at San Diego and Austin. Fresno isn’t full of high rollers, either. Sunshine tax? No, Seattle and Boston are bubblicious despite the weather. Quality of life? There are very nice cities in Colorado and Utah that have sane prices. And there are overpriced hellholes all over inland California.
But: all bubble areas have city or state governments that place a lot of restrictions on buiding (environmental studies, long and expensive approvals, etc). Non-bubble areas do not. Here’s your answer.
Incidentally, this may have something to do with the political affiliation of the population (democrats tend to favor slow-growth policies, while republicans tend to let the free market build whatever it wants). That makes blue states more prone to RE bubbles. Since political affiliation also correlates with religion, voila, you have your explanation for the post above!
