Median home prices have fallen, but not enough to match income growth. Which means homes are still less affordable than they were seven years ago. If the real estate bubble has truly burst, then what's causing it? The main culprit is land use, environmental and planning regulations that take large swaths of land and either prohibits development or makes it prohibitively expensive. Much of it in places where housing demand is highest. The price of existing housing skyrockets as the supply is restricted. These regulations mostly benefit current homeowners who demand policies that price the less fortunate out of the market and trample on the property rights of others. To add insult to injury, liberals then demand developers set aside "affordable housing" as yet another condition in order to ameliorate the problems they created.
Chanting that they must "preserve the character" of the community or protect "environmentally sensitive" land, they can feed their sense of moral superiority and wallets by forcing others to pay the bill as they lock them out. They believe their ownership of property gives them the right to dictate the terms of other's ownership in order to benefit themselves. Ironically, many of these regulations wouldn't allow the current resident's homes to be built either had they existed at the time.
It comes as no surprise that the most expensive markets are the ones with the most strict and byzantine regulatory structures. Nowhere is this fact more striking than in California, the state with the greatest hostility to new development and by far the most expensive markets in the country.
Any study of home prices needs to adjust for the distortions these markets cause.
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