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New housing supply: what do we know and how can we learn more?

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  • Pedro M. M. L. Garcês

    ()
    (ESGHT, Universidade do Algarve, Portugal)

  • Cesaltina Pacheco Pires

    ()
    (CEFAGE-UE and Departamento de Gestão, Universidade de Évora, Portugal)

Abstract

This paper reviews the literature on new housing supply. The paper starts by summarizing the results of the empirical studies on housing supply, showing that overall these studies reject the hypothesis of a perfectly elastic housing supply and reveal that housing supply is negatively related with financial costs, inflation and sales delay while showing inconclusive results with respect to the construction costs. In addition, we review a recent branch of the literature on housing supply that uses strategic interaction models. There is evidence that the housing market is not well described by the perfect competition model. Thus, a deeper understanding of housing supply can be achieved by considering theoretical models that take into account the strategic interaction between land developers and by using data where the unit of analysis is the land developer.

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Bibliographic Info

Paper provided by University of Evora, CEFAGE-UE (Portugal) in its series CEFAGE-UE Working Papers with number 2011_18.

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Length: 22 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:cfe:wpcefa:2011_18

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Keywords: Housing supply; price elasticity of supply; strategic interaction.;

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  1. Fathali Firoozi & Daniel R. Hollas & Ronald C. Rutherford & Thomas A. Thomson, 2006. "Property Assessments and Information Asymmetry in Residential Real Estate," Journal of Real Estate Research, American Real Estate Society, American Real Estate Society, vol. 28(3), pages 275-292.
  2. Didier Baudewyns, 2000. "Opening the black box of strategic interactions of land developpers," ULB Institutional Repository, ULB -- Universite Libre de Bruxelles 2013/9163, ULB -- Universite Libre de Bruxelles.
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  20. Blackley, Dixie M, 1999. "The Long-Run Elasticity of New Housing Supply in the United States: Empirical Evidence for 1950 to 1994," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 18(1), pages 25-42, January.
  21. Olsen, Edgar O., 1987. "The demand and supply of housing service: A critical survey of the empirical literature," Handbook of Regional and Urban Economics, Elsevier, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 25, pages 989-1022 Elsevier.
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  25. Falk, Barry L. & Lee, Bong-Soo, 2004. "The Inventory-Sales Relationship in the Market for New Single-Family Homes," Staff General Research Papers, Iowa State University, Department of Economics 12006, Iowa State University, Department of Economics.
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