Parking takes up space. And space is often quite expensive. Buying a house in San Francisco is expensive. So it should come as no surprise that a parking space—which, much like a closet, takes up space—in San Francisco is also expensive. But actual market rate transactions for parking are so rare that the sale price of one made news in San Francisco.*
Now I’ll be the first to admit that $82,000 is an awful lot to pay for a spot in a garage, and no doubt the vast majority of urban parking in America isn’t that costly. But the costs really are there. And not just in Manhattan or San Francisco. There are plenty of suburbs with expensive houses and widely available free parking. Which is to say there are plenty of suburbs with expensive land and a massive regulatory subsidy for automobile storage. In other words, we treat parking spaces as if they’re public goods that would be underprovided by market transactions. But, of course, parking spaces are both rivalrous and excludable. Where conditions are right, the market price of parking can be quite high and creating and selling (or leasing) parking spaces is a perfectly reasonable line of business. It’s simply that if people had to pay the full cost of parking there’d be somewhat less car ownership, somewhat less driving, and somewhat smaller vehicles.
Correction, June 14, 2013: This post originally stated that market-rate transactions for houses are rare when it should have said that such transactions rarely take place for parking spaces.