Image of the day: construction costs vs. home prices
In certain cities, prices far exceed costs
Brian Potter and Chad Syverson, Building Costs and House Prices, NBER Working Paper, June 2025.
Costs set a floor on house prices, but in certain cities, prices are way above that floor, indicating supply constraints. The gap between costs and prices is a huge incentive to build more.
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Supply constraints increased cost of apartment condos in Canadian cities. CMHC, December 2018. A similar comparison for Montreal, Toronto, and Vancouver.