by Thomas Sowell
January 2006

Not often do Rush Limbaugh and New York Times columnist Paul Krugman agree on anything but recently both of them pointed out the same pattern in the prices of housing -- and both were correct.

The pattern is this: Despite hysteria over high home prices, in most parts of the United States housing is quite affordable. But in some places housing prices are astronomical -- three times the national average in much of California, for example.

Despite the old rule of thumb that housing should cost no more than one fourth of your income, there are parts of California where tenants and new home buyers pay at least half their incomes for housing.

This can be a serious problem in such places because it means that only the other half of people's income is available to pay for such frills as food and clothing.

These dire situations are more likely to be featured in the media, partly because bad news sells newspapers and gets higher television ratings. Moreover, media elites are more likely to be living in the places where housing prices are out of sight -- places like Manhattan, coastal California, and the posh suburbs around Washington or various other cities.

It is a very different story in most of the rest of the country. A scholarly study published in the October 2005 issue of the Journal of Law and Economics concluded: "In the sprawling cities of the American heartland, land remains cheap, real construction costs are falling, and expanding supply keeps housing costs low."

In some cities, housing prices have actually declined as the housing supply has expanded. None of this is rocket science. It is supply and demand.

Why then are there particular places where housing costs have skyrocketed?

In those places, much of the land is prevented by law from being used to build housing. These land use restrictions are seldom called land use restrictions.

They are called by much prettier names, like "open space" laws, laws to "preserve farmland" or prevent "sprawl," "greenbelt" laws -- or whatever else will sell politically.

People who already own their own homes don't worry about whether such laws will drive housing prices sky high. Somebody else will have to pay those prices while existing homeowners see the value of their property rise by leaps and bounds.

Meanwhile, land that might otherwise provide homes for others becomes in effect free park land for themselves, while such upscale communities use "open space" laws to keep out the masses. The crowning touch is that such self-interest is depicted as idealism.

A famous economist named Joseph Schumpeter once said that the first thing someone will do for his ideals is lie. Some people distinguish little white lies from black lies but the biggest lies of all are green lies.

To hear environmental zealots tell it, they are just trying to save the last few patches of greenery from being paved over. But in fact the land area of the United States covered by forests is more than three times as large as the land area covered by all the cities and towns across the nation.

Only about 5 percent of the land is urban. In other words, you could double the size of every city and town in America and still nine-tenths of the land would be undeveloped.

Some of the biggest hysteria about "saving" land is found in places where most of the land is already off-limits to building. Some of the biggest crocodile tears about a need to "preserve farmland" come from people who are not farmers, and who know little and care less about farming.

Chronic agricultural surpluses that cost the taxpayers billions show that there is too much farmland producing more than the market can absorb, while the growing of these surplus crops puts all sorts of chemicals into the ground, water, and air. But the green liars don't mention that.

Their real agenda is keeping out other people. Home builders who would enable other people to move into their community are called selfish and greedy. Green liars consider themselves morally far superior to "developers."

Dr. Sowell is a senior fellow at the Hoover Institution.