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Constraints on City and Neighborhood Growth: The Central Role of Housing Supply

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  • Nathaniel Baum-Snow

Abstract

The US urban population increased by almost 50 percent between 1980 and 2020, with this growth heavily concentrated in the Sun Belt and at the fringes of metropolitan areas. This paper considers the role of housing supply in shaping the growth of cities and neighborhoods. Housing supply constraints have meant that demand growth has increasingly manifested as price growth rather than as increases in housing units or population in larger and denser metropolitan areas and neighborhoods. New housing is provided at increasingly higher cost in areas that have higher intensity of existing development and more restrictive regulatory environments. Both forces have strengthened over time, making quantity supplied less responsive to growing demand, driving housing price growth in many areas, and pushing housing quantity growth further out into urban fringes. As a result of such pressures on the cost of new construction, the United States has recently experienced more rapid price growth and a declining influence of new construction on the housing stock.

Suggested Citation

  • Nathaniel Baum-Snow, 2023. "Constraints on City and Neighborhood Growth: The Central Role of Housing Supply," Journal of Economic Perspectives, American Economic Association, vol. 37(2), pages 53-74, Spring.
    • Handle: RePEc:aea:jecper:v:37:y:2023:i:2:p:53-74
    DOI: 10.1257/jep.37.2.53
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    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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