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Residential land use regulation and the US housing price cycle between 2000 and 2009

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  • Huang, Haifang
  • Tang, Yao

Abstract

In a sample covering more than 300 cities in the US from January 2000 to July 2009, we find that more restrictive residential land use regulations and geographic land constraints are linked to larger booms and busts in housing prices. The natural and man-made constraints also amplify price responses to the subprime mortgage credit expansion during the decade, leading to greater price increases in the boom and subsequently bigger losses. Contrary to prior literature, our findings indicate a significant link between supply inelasticity and price declines during the bust, whereas Glaeser et al. (2008) found little evidence of such a relationship from an earlier downturn from 1989 to 1996.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 71 (2012)
Issue (Month): 1 ()
Pages: 93-99

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Handle: RePEc:eee:juecon:v:71:y:2012:i:1:p:93-99

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Housing; Residential land use regulation; Subprime mortgage;

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References

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  1. Edward L. Glaeser & Joseph Gyourko & Raven Saks, 2005. "Why Have Housing Prices Gone Up?," NBER Working Papers 11129, National Bureau of Economic Research, Inc.
  2. Ferreira, Fernando & Gyourko, Joseph & Tracy, Joseph, 2010. "Housing busts and household mobility," Journal of Urban Economics, Elsevier, Elsevier, vol. 68(1), pages 34-45, July.
  3. Case, Karl E. & Quigley, John M. & Shiller, Robert J., 2012. "Comparing Wealth Effects: The Stock Market versus The Housing Market," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt6px1d1sc, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. Quigley, John M. & Raphael, Steven, 2006. "Regulation and the High Cost of Housing in California," Berkeley Program on Housing and Urban Policy, Working Paper Series, Berkeley Program on Housing and Urban Policy qt3hh7s35m, Berkeley Program on Housing and Urban Policy.
  5. Glaeser, Edward L. & Ward, Bryce A., 2009. "The causes and consequences of land use regulation: Evidence from Greater Boston," Journal of Urban Economics, Elsevier, Elsevier, vol. 65(3), pages 265-278, May.
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  7. Edward L. Glaeser & Joseph Gyourko & Albert Saiz, 2008. "Housing Supply and Housing Bubbles," NBER Working Papers 14193, National Bureau of Economic Research, Inc.
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  10. Quigley, John M. & Rosenthal, Larry A., 2005. "The Effects of Land-Use Regulation on the Price of Housing: What Do We Know? What Can We Learn?," Berkeley Program on Housing and Urban Policy, Working Paper Series, Berkeley Program on Housing and Urban Policy qt90m9g90w, Berkeley Program on Housing and Urban Policy.
  11. John Y. Campbell & João F. Cocco, 2005. "How Do House Prices Affect Consumption? Evidence From Micro Data," NBER Working Papers 11534, National Bureau of Economic Research, Inc.
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  13. Black, Jane & de Meza, David & Jeffreys, David, 1996. "House Price, the Supply of Collateral and the Enterprise Economy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(434), pages 60-75, January.
  14. Robert B. Avery & Kenneth P. Brevoort & Glenn B. Canner, 2007. "Opportunities and Issues in Using HMDA Data," Journal of Real Estate Research, American Real Estate Society, American Real Estate Society, vol. 29(4), pages 351-380.
  15. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(3), pages 1253-1296, August.
  16. Ihlanfeldt, Keith R., 2007. "The effect of land use regulation on housing and land prices," Journal of Urban Economics, Elsevier, Elsevier, vol. 61(3), pages 420-435, May.
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Citations

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Cited by:
  1. Huang, MeiChi, 2014. "Bubble-like housing boom–bust cycles: Evidence from the predictive power of households’ expectations," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 54(1), pages 2-16.
  2. Jonathan N. Millar & Stephen D. Oliner & Daniel E. Sichel, 2012. "Time-to plan lags for commercial construction projects," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2012-34, Board of Governors of the Federal Reserve System (U.S.).
  3. Haifang Huang & Yao Tang, 2011. "Dropping the Geographic-Constraints Variable Makes Only a Minor Difference: Reply to Cox," Econ Journal Watch, Econ Journal Watch, Econ Journal Watch, vol. 8(1), pages 28-32, January.
  4. Mark Skidmore, 2014. "Housing Affordability: Lessons from the United States," Treasury Working Paper Series, New Zealand Treasury 14/11, New Zealand Treasury.
  5. Satyajit Chatterjee & Burcu Eyigungor, 2013. "Do supply restrictions raise the value of urban land? The (neglected) role of production externalities," Working Papers, Federal Reserve Bank of Philadelphia 13-37, Federal Reserve Bank of Philadelphia.
  6. Anundsen, André Kallåk & Heebøll, Christian, 2013. "Supply Restrictions, Subprime Lending and Regional US Housing Prices," Memorandum, Oslo University, Department of Economics 04/2013, Oslo University, Department of Economics.
  7. Wendell Cox, 2011. "Constraints on Housing Supply: Natural and Regulatory," Econ Journal Watch, Econ Journal Watch, Econ Journal Watch, vol. 8(1), pages 13-27, January.
  8. Paciorek, Andrew, 2013. "Supply constraints and housing market dynamics," Journal of Urban Economics, Elsevier, Elsevier, vol. 77(C), pages 11-26.
  9. Solé-Ollé, Albert & Viladecans-Marsal, Elisabet, 2013. "Do political parties matter for local land use policies?," Journal of Urban Economics, Elsevier, Elsevier, vol. 78(C), pages 42-56.
  10. Sarah Riley, 2012. "Land use regulations and the returns to low-income homeownership," The Annals of Regional Science, Springer, Springer, vol. 49(3), pages 745-766, December.
  11. Huang, Haifang & Humphreys, Brad, 2012. "Do New Sports Facilities Revitalize Urban Neighborhoods? Evidence from Residential Mortgage Applications," Working Papers, University of Alberta, Department of Economics 2012-5, University of Alberta, Department of Economics.
  12. Kok, Nils & Monkkonen, Paavo & Quigley, John M., 2014. "Land use regulations and the value of land and housing: An intra-metropolitan analysis," Journal of Urban Economics, Elsevier, Elsevier, vol. 81(C), pages 136-148.
  13. Andrew D. Paciorek, 2012. "Supply constraints and housing market dynamics," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2012-01, Board of Governors of the Federal Reserve System (U.S.).

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