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

Listed author(s):
  • Stuart S. Rosenthal

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.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 104 (2014)
Issue (Month): 2 (February)
Pages: 687-706

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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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  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.
  3. Hoyt, William H & Rosenthal, Stuart S, 1990. "Capital Gains Taxation and the Demand for Owner-Occupied Housing," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 45-54, February.
  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.
  6. Wilhelmsson, Mats, 2008. "House price depreciation rates and level of maintenance," Journal of Housing Economics, Elsevier, vol. 17(1), pages 88-101, March.
  7. Ferreira, Fernando & Gyourko, Joseph & Tracy, Joseph, 2010. "Housing busts and household mobility," Journal of Urban Economics, Elsevier, vol. 68(1), pages 34-45, July.
  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.
  9. Brent C Smith, 2004. "Economic Depreciation of Residential Real Estate: Microlevel Space and Time Analysis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(1), pages 161-180, March.
  10. Rosen, Harvey S., 1979. "Housing decisions and the U.S. income tax : An econometric analysis," Journal of Public Economics, Elsevier, vol. 11(1), pages 1-23, February.
  11. Edward L. Glaeser & Joseph Gyourko, 2005. "Urban Decline and Durable Housing," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 345-375, April.
  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.
  15. McMillen, Daniel & O’Sullivan, Arthur, 2013. "Option value and the price of teardown properties," Journal of Urban Economics, Elsevier, vol. 74(C), pages 71-82.
  16. Coulson, N Edward & Bond, Eric W, 1990. "A Hedonic Approach to Residential Succession," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 433-444, August.
  17. Gatzlaff, Dean H & Haurin, Donald R, 1997. "Sample Selection Bias and Repeat-Sales Index Estimates," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 33-50, Jan.-Marc.
  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.
  19. Chinloy, Peter, 1979. "The estimation of net depreciation rates on housing," Journal of Urban Economics, Elsevier, vol. 6(4), pages 432-443, October.
  20. Sweeney, James L., 1974. "A commodity hierarchy model of the rental housing market," Journal of Urban Economics, Elsevier, vol. 1(3), pages 288-323, July.
  21. Weicher, John C. & Thibodeau, Thomas G., 1988. "Filtering and housing markets: An empirical analysis," Journal of Urban Economics, Elsevier, vol. 23(1), pages 21-40, January.
  22. Rosenthal Stuart S. & Helsley Robert W., 1994. "Redevelopment and the Urban Land Price Gradient," Journal of Urban Economics, Elsevier, vol. 35(2), pages 182-200, March.
  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.
  24. Glaeser, Edward L. & Kahn, Matthew E. & Rappaport, Jordan, 2008. "Why do the poor live in cities The role of public transportation," Journal of Urban Economics, Elsevier, vol. 63(1), pages 1-24, January.
  25. Ohls, James C., 1975. "Public policy toward low income housing and filtering in housing markets," Journal of Urban Economics, Elsevier, vol. 2(2), pages 144-171, April.
  26. Leigh, Wilhelmina A, 1980. "Economic Depreciation of the Residential Housing Stock of the United States, 1950-1970," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 200-206, May.
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