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Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts

  • David H. Autor
  • Christopher J. Palmer
  • Parag A. Pathak

We measure the capitalization of housing market externalities into residential housing values by studying the unanticipated elimination of stringent rent controls in Cambridge, Massachusetts, in 1995. Pooling data on the universe of assessed values and transacted prices of Cambridge residential properties between 1988 and 2005, we find that rent decontrol generated substantial, robust price appreciation at decontrolled units and nearby never-controlled units, accounting for a quarter of the $7.8 billion in Cambridge residential property appreciation during this period. The majority of this contribution stems from induced appreciation of never-controlled properties. Residential investment explains only a small fraction of the total.

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File URL: http://www.jstor.org/stable/pdfplus/10.1086/675536
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File URL: http://www.jstor.org/stable/full/10.1086/675536
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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 122 (2014)
Issue (Month): 3 ()
Pages: 661 - 717

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Handle: RePEc:ucp:jpolec:doi:10.1086/675536
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. Genesove, David & Mayer, Christopher, 2001. "Loss Aversion and Seller Behaviour: Evidence from the Housing Market," CEPR Discussion Papers 2813, C.E.P.R. Discussion Papers.
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