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Is Housing Unaffordable? Why Isn't It More Affordable?

  • John M. Quigley
  • Steven Raphael

This paper reviews trends in housing affordability in the U.S. over the past four decades. There is little evidence that owner-occupied housing has become less affordable. In contrast, there have been modest increases in the fraction of income that the median renter household devotes to housing. We find pronounced increases in the rent burdens for poor households. We explore the low-income rental market in more detail, analyzing the relative importance of changes in the income distribution, in housing quality, land use regulation, and zoning in affecting rent burdens. We also sketch out some policies that might improve housing affordability.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/089533004773563494
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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 18 (2004)
Issue (Month): 1 (Winter)
Pages: 191-214

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Handle: RePEc:aea:jecper:v:18:y:2004:i:1:p:191-214
Note: DOI: 10.1257/089533004773563494
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  1. Rosen, Harvey S & Rosen, Kenneth T & Holtz-Eakin, Douglas, 1984. "Housing Tenure, Uncertainty, and Taxation," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 405-16, August.
  2. Maclennan, Duncan & Muellbauer, John & Stephens, Mark, 1998. "Asymmetries in Housing and Financial Market Institutions and EMU," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 54-80, Autumn.
  3. Donald R. Haurin & Toby L. Parcel & R. Jean Haurin, 2002. "Does Homeownership Affect Child Outcomes?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(4), pages 635-666.
  4. Green, Richard K., 1999. "Land Use Regulation and the Price of Housing in a Suburban Wisconsin County," Journal of Housing Economics, Elsevier, vol. 8(2), pages 144-159, June.
  5. Mayo, Stephen K., 1981. "Theory and estimation in the economics of housing demand," Journal of Urban Economics, Elsevier, vol. 10(1), pages 95-116, July.
  6. Albert Saiz, 2003. "Room in the Kitchen for the Melting Pot: Immigration and Rental Prices," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 502-521, August.
  7. James A. Thorson, 1996. "An Examination of the Monopoly Zoning Hypothesis," Land Economics, University of Wisconsin Press, vol. 72(1), pages 43-55.
  8. O'Flaherty, B., 1995. "An Economic Theory of Homelessness and Housing," Journal of Housing Economics, Elsevier, vol. 4(1), pages 13-49, March.
  9. Stephen Malpezzi, 1994. "Housing Prices, Externalities, and Regulation in U.S. Metropolitan Areas," Wisconsin-Madison CULER working papers 94-08, University of Wisconsin Center for Urban Land Economic Research.
  10. Denice DiPasquale & Edward L. Glaeser, 1997. "Incentives and Social Capital: Are Homeowners Better Citizens?," Harvard Institute of Economic Research Working Papers 1815, Harvard - Institute of Economic Research.
  11. 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 99-16, University of Wisconsin Center for Urban Land Economic Research.
  12. Christopher J. Mayer & C. Tsuriel Somerville, . "Land Use Regulation and New Construction," Zell/Lurie Center Working Papers 331, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  13. John M. Quigley & Steven Raphael & Eugene Smolensky, 2001. "Homeless In America, Homeless In California," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 37-51, February.
  14. Thorson, James A., 1997. "The Effect of Zoning on Housing Construction," Journal of Housing Economics, Elsevier, vol. 6(1), pages 81-91, March.
  15. Quigley, John M., 2002. "A Decent Home: Housing Policy in Perspective," Berkeley Program on Housing and Urban Policy, Working Paper Series qt8f57x42q, Berkeley Program on Housing and Urban Policy.
  16. 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.
  17. Henry O. Pollakowski & Susan M. Wachter, 1990. "The Effects of Land-Use Constraints on Housing Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 315-324.
  18. Richard Voith, 1999. "Does the federal tax treatment of housing affect the pattern of metropolitan development?," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 3-16.
  19. Stephen Malpezzi & Richard K. Green, 1995. "What’s Happened to the Bottom of the Housing Market?," Wisconsin-Madison CULER working papers 95-16, University of Wisconsin Center for Urban Land Economic Research.
  20. Edward L. Glaeser & Joseph Gyourko, 2003. "The impact of building restrictions on housing affordability," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 21-39.
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