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The Impact of the COVID-19 Pandemic on the Demand for Density: Evidence from the U.S. Housing Market

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  • Sitian Liu
  • Yichen Su

Abstract

Cities are shaped by the strength of agglomeration and dispersion forces. We show that the COVID-19 pandemic has re-introduced disease transmission as a dispersion force in modern cities. We use detailed housing data to study the impact of the COVID-19 pandemic on the location demand for housing. We find that the pandemic has led to a reduced demand for housing in neighborhoods with high population density. The reduced demand for density is driven partially by the diminished need of living close to jobs that are telework-compatible and the declining value of access to consumption amenities. Neighborhoods with high pre-COVID-19 home prices also see a greater drop in housing demand. While the national housing market recovered after June, we show that the pandemic's negative effect on the demand for density persisted and strengthened, indicating that the change in the demand for density has lasted beyond an aggregate recovery of housing demand.

Suggested Citation

  • Sitian Liu & Yichen Su, 2020. "The Impact of the COVID-19 Pandemic on the Demand for Density: Evidence from the U.S. Housing Market," Working Papers 2024, Federal Reserve Bank of Dallas, revised 23 Oct 2020.
    • Handle: RePEc:fip:feddwp:88597
    DOI: 10.24149/wp2024r1
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    More about this item

    Keywords

    COVID-19; Pandemic; Density; City; Neighborhood; Housing; Location; Telework; Amenity;
    All these keywords.

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • I1 - Health, Education, and Welfare - - Health

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