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Are Private Markets and Filtering a Viable Source of Low-Income Housing? Estimates from a "Repeat Income" Model

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  • Stuart S. Rosenthal

Abstract

While filtering has long been considered the primary mechanism by which markets supply low-income housing, direct estimates of that process have been absent. This has contributed to doubts about the viability of markets and to misplaced policy. I fill this gap by estimating a "repeat income" model using 1985-2011 panel data. Real annual filtering rates are faster for rental housing (2.5 percent) than owner-occupied (0.5 percent), vary inversely with the income elasticity of demand and house price inflation, and are sensitive to tenure transitions as homes age. For most locations, filtering is robust which lends support for housing voucher programs.

Suggested Citation

  • Stuart S. Rosenthal, 2014. "Are Private Markets and Filtering a Viable Source of Low-Income Housing? Estimates from a "Repeat Income" Model," American Economic Review, American Economic Association, vol. 104(2), pages 687-706, February.
  • Handle: RePEc:aea:aecrev:v:104:y:2014:i:2:p:687-706
    Note: DOI: 10.1257/aer.104.2.687
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    References listed on IDEAS

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    1. Jan K. Brueckner & Stuart S. Rosenthal, 2009. "Gentrification and Neighborhood Housing Cycles: Will America's Future Downtowns Be Rich?," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 725-743, November.
    2. Dye, Richard F. & McMillen, Daniel P., 2007. "Teardowns and land values in the Chicago metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 45-63, January.
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    4. Eriksen, Michael D. & Rosenthal, Stuart S., 2010. "Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 953-966, December.
    5. Braid, Ralph M., 1984. "The effects of government housing policies in a vintage filtering model," Journal of Urban Economics, Elsevier, vol. 16(3), pages 272-296, November.
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    8. Case, Bradford & Quigley, John M, 1991. "The Dynamics of Real Estate Prices," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 50-58, February.
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    12. Rosenthal, Stuart S. & Duca, John V. & Gabriel, Stuart A., 1991. "Credit rationing and the demand for owner-occupied housing," Journal of Urban Economics, Elsevier, vol. 30(1), pages 48-63, July.
    13. Eriksen, Michael D., 2009. "The market price of Low-Income Housing Tax Credits," Journal of Urban Economics, Elsevier, vol. 66(2), pages 141-149, September.
    14. Rosenthal, Stuart S., 2008. "Old homes, externalities, and poor neighborhoods. A model of urban decline and renewal," Journal of Urban Economics, Elsevier, vol. 63(3), pages 816-840, May.
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    18. John P. Harding & Stuart S. Rosenthal & C. F. Sirmans, 2003. "Estimating Bargaining Power in the Market for Existing Homes," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 178-188, February.
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    23. Harding, John P. & Rosenthal, Stuart S. & Sirmans, C.F., 2007. "Depreciation of housing capital, maintenance, and house price inflation: Estimates from a repeat sales model," Journal of Urban Economics, Elsevier, vol. 61(2), pages 193-217, March.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Felipe Berrutti, 2016. "Subsidios a la oferta y decisiones de localización: El caso de la Ley de Vivienda de Interés Social," Documentos de Investigación Estudiantil (students working papers) 16-02, Instituto de Economía - IECON.
    2. Baum-Snow, Nathaniel & Ferreira, Fernando, 2015. "Causal Inference in Urban and Regional Economics," Handbook of Regional and Urban Economics, Elsevier.
    3. Ouazad, Amine & Rancière, Romain, 2015. "Structural Demand Estimation with Borrowing Constraints," CEPR Discussion Papers 10866, C.E.P.R. Discussion Papers.
    4. Rosenthal, Stuart S. & Ross, Stephen L., 2015. "Change and Persistence in the Economic Status of Neighborhoods and Cities," Handbook of Regional and Urban Economics, Elsevier.
    5. Amine Ouazad & Romain Rancière, 2015. "Structural Demand Estimation with Borrowing Constraints," Working Papers halshs-01207997, HAL.
    6. Amine Ouazad & Romain Rancière, 2017. "City Equilibrium with Borrowing Constraints: Structural Estimation and General Equilibrium Effects," NBER Working Papers 23994, National Bureau of Economic Research, Inc.
    7. Crocker H. Liu & Adam Nowak & Stuart Rosenthal, 2014. "Bubbles, Post-Crash Dynamics, and the Housing Market," Working Papers 14-18, Department of Economics, West Virginia University.
    8. Paul E. Carrillo & Benjamin Williams, 2015. "The Repeat Time-On-The-Market Index," Working Papers 2015-8, The George Washington University, Institute for International Economic Policy.
    9. repec:eee:juecon:v:99:y:2017:i:c:p:120-135 is not listed on IDEAS
    10. repec:eee:jhouse:v:36:y:2017:i:c:p:1-7 is not listed on IDEAS
    11. Duranton, Gilles & Puga, Diego, 2015. "Urban Land Use," Handbook of Regional and Urban Economics, Elsevier.
    12. Liu, Crocker H. & Nowak, Adam & Rosenthal, Stuart S., 2016. "Housing price bubbles, new supply, and within-city dynamics," Journal of Urban Economics, Elsevier, vol. 96(C), pages 55-72.
    13. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, Elsevier.
    14. Stuart A. Gabriel & Stuart S. Rosenthal, 2015. "The Boom, the Bust and the Future of Homeownership," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 334-374, June.

    More about this item

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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