09 April 2008

Delong is Wrong and Krugman is Right

Brad Delong belives that a significant part of the housing bubble appreciation was due to a real lack of space, and thus he guesses that only about ½ of the appreciation will be lost, thinking that some of the appreciation is being driven by the , "location, location, location" factor.

Paul Krugman looks at the trajectories of rental and buying, and sees appreciating in housing but basically none in rentals, which would not be the case if there were actually a shortage of land in desirable locations.



Krugman is clearly right.

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