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Supply Skepticism: Housing Supply and Affordability

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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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    File URL: http://hdl.handle.net/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 Building the skyline on 2019-07-01 11:55:38

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