Cities are the engines of U.S. economic growth, but housing costs put them out of reach for many Americans. One major reason is that cities severely limit new residential construction, especially apartment buildings. For example, San Francisco permits tall buildings only in its northeast corner and Bayview, which together comprise less than a sixth of the city. Housing laws that favor tenants also reduce the incentive for developers to supply new apartments, as Milton Friedman and George Stigler observed as far back as the 1940s. Recently New York state approved a permanent extension of rent control in nearly one million apartments, and Oregon has made it more difficult to evict nonpaying tenants.

The problem is that local voters have an interest in restricting the housing supply. Existing homeowners worry that new housing will lower the prices of their homes. Existing tenants want price controls to limit rents. While prospective residents want new housing in cities, they don’t get to vote in local elections.

Fortunately, there’s a solution to this impasse. New residents are willing to pay significantly more for additional housing than it costs to build it. They could compensate existing property owners for the reduction in prices caused by new construction and still gain from moving to the city. Such a compromise is possible until the point at which new construction reduces the value of existing homeowners’ property by an amount greater than the value it affords new residents. Allowing incoming residents to compensate homeowners would help cities grow to their ideal size, at which the cost of adding one more resident is equal to that resident’s benefit to the city’s economy.

Netanyahu Rivals Team Up Against the Prime Minister for Israel’s Elections

Centrist candidates strike an alliance in a bid to unseat the prime minister

If elected, Benny Gantz, a retired Israeli army chief, and Yair Lapid, a former TV anchor turned parliamentarian, agreed to take turns at running the country, they said in a statement Thursday. Mr. Gantz would serve as prime minister for the first 2½ years, and Mr. Lapid would take over for the rest of the four-year term.

The agreement between the centrist politicians is a result of several weeks of discussions amid questions over whether the two men could put aside their personal ambitions to unite against Mr. Netanyahu.

It also comes at a vulnerable moment for Mr. Netanyahu, who is expected to be indicted on corruption charges later this month. He will have a chance to defend himself in a hearing before charges are formally filed, and he has vowed to stay in power and to fight them. He doesn’t have to resign unless convicted. Mr. Netanyahu has denied wrongdoing..

Opinion polls project a tight contest, but some indicate that Mr. Gantz’s Israel Resilience party and Mr. Lapid’s Yesh Atid party could together secure more seats in Israel’s parliament than Mr. Netanyahu’s Likud.

“The new ruling party will bring forth a cadre of security and social leaders to ensure Israel’s security and to reconnect its people and heal the divide within Israeli society,” the parties said in a statement.

The two parties also said they would add former Israeli army chief Gabi Ashkenazi to their slate. Mr. Ashkenazi is seen as an important player in attracting votes from the right, which will be important if Messrs. Gantz and Lapid are to unseat Mr. Netanyahu.

Both Mr. Gantz and Mr. Lapid are running as anti-Netanyahu candidates, while emphasizing a commitment to addressing social problems in Israel like education, housing, health care and traffic.

They have struck a more moderate tone than Mr. Netanyahu on handling relations with the Palestinians. Before the agreement, Mr. Lapid’s camp said it was unsure whether Mr. Gantz supported a two-state solution to the Israeli-Palestinian conflict, citing at least one in his party who has opposed it in the past.

Mr. Netanyahu’s Likud party said the election would be a choice of “either a left-wing government of Lapid-Gantz with preventative support from the Arab parties, or a right-wing government with Netanyahu at its helm.”

As an alliance became more likely, Mr. Netanyahu issued statements and videos painting Mr. Gantz and Mr. Lapid as weak and leftist, while describing himself and his party as strong and right.

.. Israeli politicians must submit their party lists to Israel’s Central Election Committee by Thursday. Those lists must disclose whether the politicians will run as one ticket.

.. “For the first time since 2009 we have a competitive race for the premiership,” said Yohanan Plesner, president of the Jerusalem-based Israel Democracy Institute. “The main question is whether this new list can lure or be attractive enough for some center right and soft right voters. This is probably the question that will determine the outcome of the election.”

Mr. Gantz entered politics late last year, brandishing his security credentials but saying little about his policy positions to try to lure a broad swath of the electorate. He has consistently polled second to Mr. Netanyahu and his Likud party.

Mr. Lapid’s party finished second in the 2013 elections, the first contest after it was created, but has slid in the polls ever since. Mr. Lapid served for a year as the finance minister in Mr. Netanyahu’s government.

Fed Says Student Debt Is Hurting U.S. Housing Market

Report finds student debt has prevented 400,000 young Americans from buying homes, may help explain urban-rural economic divide

Student debt has prevented hundreds of thousands of young Americans from buying a home in recent years and may help explain why many college graduates have moved out of rural areas, the Federal Reserve said Wednesday.

The drop in homeownership among young households and the growing economic divide between rural and urban areas are two big puzzles of the economy this century. The Fed now says student debt—which has more than doubled over the past decade to $1.5 trillion—is one factor helping explain the shifts.

The share of households headed by someone between ages 24 and 32 years old who owned a home declined 9 percentage points in the decade through 2014, falling to 36% from 45%, the Fed said. There were many factors, but roughly 2 percentage points—or 20%—of the decline was directly due to households owing student debt, the Fed found.

The report also found that people with student debt are far more likely to move out of rural areas than those without student debt. “Only 52 percent of rural student loan borrowers still live in rural areas” six years after their records appear in a database that tracks consumer credit reports, the Fed said.

A ‘Forgotten History’ Of How The U.S. Government Segregated America

Today African-American incomes on average are about 60 percent of average white incomes. But African-American wealth is about 5 percent of white wealth. Most middle-class families in this country gain their wealth from the equity they have in their homes. So this enormous difference between a 60 percent income ratio and a 5 percent wealth ratio is almost entirely attributable to federal housing policy implemented through the 20th century.

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