A new research paper by Harvard's Edward L. Glaeser and Wharton's Joseph Gyourko (with Harvard's Raven Saks) provides yet more empirical evidence of the regulatory influence on rising housing prices:
Since 1950, housing prices have risen regularly by almost two percent per year. Between 1950 and 1970, this increase reflects rising housing quality and construction costs. Since 1970, this increase reflects the increasing difficulty of obtaining regulatory approval for building new homes. In this paper, we present a simple model of regulatory approval that suggests a number of explanations for this change including changing judicial tastes, decreasing ability to bribe regulators, rising incomes and greater tastes for amenities, and
improvements in the ability of homeowners to organize and influence local decisions. Our preliminary evidence suggests that there was a significant increase in the ability of local residents to block new projects and a change of cities from urban growth machines to homeowners' cooperatives.
More from the paper:
In much of the country, new housing units still are abundant and housing prices remain low. In contrast, new construction has plummeted and housing prices have soared in a small, but increasing number of places. These changes do not appear to be the result of a declining availability of land, but rather are the result of a
changing regulatory regime that has made large-scale development increasingly difficult in expensive regions of the country.
For more on Glaeser, et al.'s extensive work in this area, see their research from Manhattan
and this paper on zoning and housing affordability