During the bubble, people coming from the most expensive places viewed even moderately expensive housing in places like Phoenix as a bargain, especially if they expected the value of such housing to rise, says Edward Glaeser, a Harvard economist who studies cities.But, Mr. Glaeser says, there is also a historical trend driven by severe restrictions on building new housing in highly regulated cities like San Francisco, Washington and New York. Whereas high housing prices were once a sign of growth because they indicated strong demand, now they are more a function of limited supply.
As I discussed in this 2011 post, similar developments have led many African-Americans to migrate to the South (where zoning restrictions tend to be weaker) from northern cities such as New York – a reversal of historical trends. Economist Edward Glaeser, quoted in the Times piece, has been making the case against restrictive zoning laws for years. He summarized his arguments in this 2008 article.