The best two sentences I read this morning

In this paper, we present a simple model of housing bubbles that
predicts that places with more elastic housing supply have fewer and
shorter bubbles, with smaller price increases. However, the welfare
consequences of bubbles may actually be higher in more elastic places
because those places will overbuild more in response to a bubble.

That’s from Ed Glaeser, Joseph Gyourko, and Albert Saiz.  Here is the paper, ungated here, here is Mark Thoma’s commentary.