"Perhaps the greatest trick American politics ever played was disappearing the 2000s housing collapse. Remember, it was a shocking 30 percent drop in value of an asset that was the supposedly supersafe cornerstone of personal wealth and retirement savings. But we don’t talk much about it. That, even though housing remains central to many of the problems and risks in the American economy and elsewhere. “Governments across the rich world,” argues The Economist in a big cover story, “have made it too difficult to build the accommodation that their populations require; they have created unwise economic incentives for households to funnel more money into the housing market; and they have failed to design a regulatory infrastructure to constrain housing bubbles.”
But while low housing prices — after a collapsed bubble — were the big problem a decade ago, today it’s high housing prices in some of America’s most productive cities. For example: In “Moving to density: Half a century of housing costs and wage premia from Queens to King Salmon,” researchers (Philip Hoxie and Stan Veuger of AEI, as well as Daniel Shoag of Harvard Kennedy School and Case Western Reserve University) look at why non-college folks aren’t moving to cities the way they used to. And a big reason is that it doesn’t pay to move the way it used to is because of housing costs. Indeed, they find “there is now, on average, an urban wage penalty after accounting for the cost of shelter.”"