Priced out

What happens when urban land prices escalate so rapidly that the majority of the next generation is shut out from home ownership and affordable rents? And what can we do about these rapidly escalating prices?

These are two key questions that Patrick Condon explores in his influential new book. Building on the work of Thomas Piketty in Capital in the Twenty-First Century (a longitudinal and global study of wealth accumulation and growing inequality that spans hundreds of years), Condon turns his attention to the past 40 years and one particular area of inequality: the price of urban land. In Vancouver, British Columbia, where Condon lives and teaches, land prices—adjusted for inflation—rose by 500 percent between 2006 and 2022, while building costs rose the equivalent of about 30 percent. He cites similar trends for many major urban centers across the Western world—and to some extent in nearly all growing cities in North America, the United Kingdom, New Zealand, and Australia, all of which are included in his study.

So what can we do about skyrocketing urban land prices? One of the typical responses by governments is to attempt to increase housing supply. However, in a global market, Condon demonstrates, this strategy has little impact on reducing prices, particularly if it is not paired with zoning adjustments and rent control policies. Indeed, when housing supply increases without changes to any of these adjoining policies, nearly all of the increased value of the land (what economists refer to as “land rent”) goes to the owner, not to the public or the wage earner or even the developer. This is the reality that drives the increasing inequality between homeowners/landowners and mere wage earners.