The problems with policy

Growth controls raise housing prices. Supply and demand cannot be fooled. And New Urbanists (and "Smart Growth" planners) like policies that compel builders to increase densities and supply open space (and ironically "affordable housing"). These also push up costs -- and evenutually housing prices. And Ed Mills notes that many jurisdictions (like William Fischel's Homevoter Cities) restrict densities, keeping them too low for their own economic reasons.

Any controls that push suppliers away from the product mix they would prefer to market have the potential to push up costs -- which have the effect of reducing profitablity and/or pushing up prices.

Mills suggests that the demand for subprime mortgages (and the crisis that they prompted) were a natural result of local governments pushing low densities and increasing house prices via that channel.

He notes that all levels of government have had a hand in the problem, not just the federal. Mills concludes that neither federal, state, nor local will mend their ways. "I conclude this pessmistic evaluation with the advice that housing is, even at best, a risky investment. Let the buyer beware."