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Residential Land Use Regulation and the US Housing Price Cycle Between 2000 and 2009

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  • Huang, Haifang

    ()
    (University of Alberta, Department of Economics)

  • Tang, Yao

    ()
    (Department of Economics, Bowdoin College)

Abstract

In a sample covering more than 300 cities in the US between January 2000 and 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 an initial positive mortgage-credit supply shock, leading to greater price increases in the boom and subsequently bigger losses.

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File URL: http://www.economics.ualberta.ca/~/media/economics/FacultyAndStaff/WPs/WP2010-11-Huang.pdf
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Bibliographic Info

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2010-11.

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Length: 40 pages
Date of creation: 07 Jul 2010
Date of revision: 01 Nov 2010
Handle: RePEc:ris:albaec:2010_011

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Keywords: residential land use regulation; credit expansion; housing prices;

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References

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  1. 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.
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  3. John Y. Campbell & Joao F. Cocco, 2004. "How Do House Prices Affect Consumption? Evidence From Micro F. Data," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 2045, Harvard - Institute of Economic Research.
  4. Ferreira, Fernando & Gyourko, Joseph & Tracy, Joseph, 2010. "Housing busts and household mobility," Journal of Urban Economics, Elsevier, vol. 68(1), pages 34-45, July.
  5. Ihlanfeldt, Keith R., 2007. "The effect of land use regulation on housing and land prices," Journal of Urban Economics, Elsevier, vol. 61(3), pages 420-435, May.
  6. 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.
  7. Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 1999. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," Wisconsin-Madison CULER working papers, University of Wisconsin Center for Urban Land Economic Research 99-16, University of Wisconsin Center for Urban Land Economic Research.
  8. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 5(1), pages 1-34, May.
  9. 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.
  10. Rosenthal, Stuart S, 1999. "Housing Supply: The Other Half of the Market a Note from the Editor," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 18(1), pages 5-7, January.
  11. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(4), pages 1449-1496, November.
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  13. Dennis R. Capozza & Patric H. Hendershott & Charlotte Mack, 2004. "An Anatomy of Price Dynamics in Illiquid Markets: Analysis and Evidence from Local Housing Markets," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 32(1), pages 1-32, 03.
  14. Davis, Morris A. & Palumbo, Michael G., 2008. "The price of residential land in large US cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 352-384, January.
  15. Stephen Malpezzi & Gregory H. Chun & Richard K. Green, 1998. "New Place-to-Place Housing Price Indexes for U.S. Metropolitan Areas, and Their Determinants," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 26(2), pages 235-274.
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  18. Glaeser, Edward L. & Ward, Bryce A., 2009. "The causes and consequences of land use regulation: Evidence from Greater Boston," Journal of Urban Economics, Elsevier, vol. 65(3), pages 265-278, May.
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Citations

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Cited by:
  1. Satyajit Chatterjee & Burcu Eyigungor, 2013. "Do supply restrictions raise the value of urban land? The (neglected) role of production externalities," Working Papers 13-37, Federal Reserve Bank of Philadelphia.
  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. 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, vol. 81(C), pages 136-148.
  4. Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2012. "Do political parties matter for local land use policies?," Working Papers 2012/28, Institut d'Economia de Barcelona (IEB).
  5. Paciorek, Andrew, 2013. "Supply constraints and housing market dynamics," Journal of Urban Economics, Elsevier, vol. 77(C), pages 11-26.
  6. Wendell Cox, 2011. "Constraints on Housing Supply: Natural and Regulatory," Econ Journal Watch, Econ Journal Watch, vol. 8(1), pages 13-27, January.
  7. Mark Skidmore, 2014. "Housing Affordability: Lessons from the United States," Treasury Working Paper Series 14/11, New Zealand Treasury.
  8. 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.
  9. 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.).
  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. Haifang Huang & Yao Tang, 2011. "Dropping the Geographic-Constraints Variable Makes Only a Minor Difference: Reply to Cox," Econ Journal Watch, Econ Journal Watch, vol. 8(1), pages 28-32, January.
  12. Huang, Haifang & Humphreys, Brad, 2012. "Do New Sports Facilities Revitalize Urban Neighborhoods? Evidence from Residential Mortgage Applications," Working Papers 2012-5, University of Alberta, Department of Economics.
  13. 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.

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