The following appeared in a letter to the editor of the Maple City newspaper.

“Twenty years ago Pine City established strict laws designed to limit the number of new buildings that could be constructed in the city. Since that time the average housing prices in Pine City have increased considerably. Chestnut City, which is about the same size as Pine City, has over the past twenty years experienced an increase in average housing prices similar to Pine City, but Chestnut City never established any laws that limit new building construction. So it is clear that laws limiting new construction have no effect on average housing prices. So if Maple City were to establish strict laws that limit new building construction, these laws will have no effect on average housing prices.”

The writer of the letter to the editor is of the view that strict laws that limit the number of new buildings would not affect the average housing prices in Maple City. He cites the example of two cities, Pine City with strict laws and Chestnut City without any laws, where the average housing prices have increased. Therefore, the writer comes to the conclusion that laws limiting new construction do not have an effect on average housing prices. However, the writer only shows lack of good sense and judgment in believing so. He misinterprets the given facts, which can have other implications as well. Moreover, he ignores many possibilities that could have resulted in the increase in housing prices.

First of all, the writer is referring to the laws established in Pine City twenty years ago. He also refers to Chestnut City twenty years ago. Considering that twenty years is a long time, the change in housing prices is inevitable. With the passage of time, there is increase in prices of every commodity due to inflation. Constructing new buildings also comes under this and there could be a considerable increase in the prices of construction material used in buildings due to the inflation over twenty years. However, in case the inflation sees a downward trend in future, it could have an opposite effect on the prices of commodities including construction material. Therefore, it is likely that if the city experiences a crash of the economy or deflation in future, its housing prices also go down. Therefore, the writer should not assume that since housing prices in the two cities have increased in the past, Maple City would also experience the same.

The conclusion derived by the writer is questionable since he does not analyze the reasons for the increase in average housing prices in both the cities. It is possible that the average housing prices in Pine City have actually increased due to the strict laws. It is possible that Pine City is an upcoming city and more and more people want to settle there. However, putting limit on the number of buildings that could be constructed would limit their choice. Therefore, it is possible that in Pine City, the demand of houses is more than the supply due to the laws restricting new construction, which has resulted in increase in the average housing prices.

On the other hand, it is possible that in presence of laws in Chestnut City, there would not have been such an increase in average housing prices as is seen in the city. It is possible that people have chosen to settle in Chestnut City due to such strict laws in other cities. Therefore, since they could not construct new buildings in other cities like Pine City, they have constructed these buildings in Chestnut City where there are no such limits. The increase in housing prices could thus be due to the increase in demand and more and more people moving to the city. However, if there were strict laws in the city, it is possible that they did not find this city as attractive and people would have chosen another place to settle. That would mean that the average housing prices would not increase in the presence of strict laws.

Clearly, the writer does not take into consideration these possibilities. He simply comes to the conclusion by observing the average housing prices in the two cities. However, each city is different in terms of its economy. While a progressive city will see an increase in housing prices, it would be different in a backward city. Therefore, the writer should not simply rely on the result in these cities. Moreover, it is clear from the given discussion that strict laws can have an effect on the average housing prices. The writer must therefore, think logically and present a more reasonable argument.