I disagree that it is a drag on the economy. At the local level where these laws are enacted, yes, but not at the national level. The reason? Competition from other metropolitan areas.
For example, I moved from metropolitan Boston Mass because, among other things, real estate prices were unaffordable. That was in the early 80's, and since then it's only gotten worse. The house that I grew up in is on a tiny lot in a crowded neighborhood, 3200 square feet, wood siding, and is currently assessed at $1.1 million. In comparison, my house in metropolitan Winston-Salem is on a half-acre lot backing up to a densely wooded area that will never be developed, a neighborhood pool, 4100 square feet, all brick, and is assessed at under $300,000. Cost per square foot is almost 5 times higher in Boston, and for a lower quality of housing.
So while Boston's economy is getting dragged down, Winston-Salem's is booming, so it all evens out.
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