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Why is Manhattan So Expensive?

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Publication Date: November 2003

Publisher(s): Manhattan Institute for Policy Research. Center for Civic Innovation

Author(s): Joseph Gyourko; Edward L. Glaeser

Topic: Economics (Property and wealth)
Government (Local and municipal government)
Social conditions (Housing)

Keywords: housing supply; housing costs; zoning tax; housing regulation

Type: Report

Coverage: New York


Over the past 20 years, the price of apartments in Manhattan has increased twice as fast as the rest of the nation. This has not been the case historically. The difference between pre-1980 Manhattan and today is vastly increased regulatory constraints on housing supply. By restricting the supply of new apartments, burdensome state and city regulations exert a "zoning tax" on housing prices that is responsible for much of the high cost of housing in Manhattan. This study finds that the zoning tax is responsible for 50% or more of the total price of the median Manhattan condominium, and 25% of the total price of the median Manhattan cooperative apartment.