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Supply Skepticism: Housing Supply and Affordability

Author

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  • Vicki Been
  • Ingrid Gould Ellen
  • Katherine O’Regan

Abstract

Growing numbers of affordable housing advocates and community members are questioning the premise that increasing the supply of market-rate housing will result in housing that is more affordable. Economists and other experts who favor increases in supply have failed to take these supply skeptics seriously. But left unanswered, supply skepticism is likely to continue to feed local opposition to housing construction, and further increase the prevalence and intensity of land-use regulations that limit construction. This article is meant to bridge the divide, addressing each of the key arguments supply skeptics make and reviewing what research has shown about housing supply and its effect on affordability. We ultimately conclude, from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families. We argue further that there are additional reasons to be concerned about inadequate supply response and assess the evidence on those effects of limiting supply, including preventing workers from moving to areas with growing job opportunities. Finally, we conclude by emphasizing that new market-rate housing is necessary but not sufficient. Government intervention is critical to ensure that supply is added at prices affordable to a range of incomes.

Suggested Citation

  • Vicki Been & Ingrid Gould Ellen & Katherine O’Regan, 2019. "Supply Skepticism: Housing Supply and Affordability," Housing Policy Debate, Taylor & Francis Journals, vol. 29(1), pages 25-40, January.
  • Handle: RePEc:taf:houspd:v:29:y:2019:i:1:p:25-40
    DOI: 10.1080/10511482.2018.1476899
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Skyscrapers, Housing, and Cities: A Q&A Interview with Ingrid Gould Ellen (Part II)
      by Jason Barr in Skynomics Blog on 2019-07-01 11:55:38
    2. Urban Umami or Urban Appakukan?: The Psychology of Streetscapes
      by Jason Barr in Skynomics Blog on 2020-10-22 12:34:19
    3. New Yimby City: A Roundtable Q&A with Open New York (Part I)
      by Jason Barr in Skynomics Blog on 2021-04-05 12:11:16
    4. Six Policy Ideas for the Next Mayor of New York City
      by Jason Barr in Skynomics Blog on 2021-06-22 12:11:35

    Citations

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    Cited by:

    1. Dionissi Aliprantis & Hal Martin & Kristen Tauber, 2020. "What Determines the Success of Housing Mobility Programs?," Working Papers 202036, Federal Reserve Bank of Cleveland.
    2. Brian Asquith & Evan Mast & Davin Reed, 2019. "Supply Shock Versus Demand Shock: The Local Effects of New Housing in Low-Income Areas," Upjohn Working Papers and Journal Articles 19-316, W.E. Upjohn Institute for Employment Research.
    3. Gilbert, Catherine & Gurran, Nicole, 2021. "Can ceding planning controls for major projects support metropolitan housing supply and diversity? The case of Sydney, Australia," Land Use Policy, Elsevier, vol. 102(C).
    4. Ryan Greenaway-McGrevy & Gail Pacheco & Kade Sorensen, 2021. "The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand," Urban Studies, Urban Studies Journal Limited, vol. 58(5), pages 959-976, April.
    5. Evan Mast, 2019. "The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market," Upjohn Working Papers and Journal Articles 19-307, W.E. Upjohn Institute for Employment Research.
    6. Peter Phibbs & Nicole Gurran, 2021. "The role and significance of planning in the determination of house prices in Australia: Recent policy debates," Environment and Planning A, , vol. 53(3), pages 457-479, May.

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