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Housing Bubbles and Busts: The Role of Supply Elasticity

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  • Keith Ihlanfeldt
  • Tom Mayock

Abstract

Existing studies of the relationship between housing price dynamics and housing supply—which have relied upon questionable proxies for supply elasticity—have yielded highly mixed results. In this paper we provide new evidence on this relationship based on actual estimates of the price elasticity of supply for local markets in Florida. Intermarket differences in housing supply elasticity are found to explain much of the variation in housing price movements and new construction during the most recent boom-bust cycle. Additionally, we find that variance in the elasticity of housing supply can be attributed to differences in land availability and the local fiscal and regulatory environment.

Suggested Citation

  • Keith Ihlanfeldt & Tom Mayock, 2014. "Housing Bubbles and Busts: The Role of Supply Elasticity," Land Economics, University of Wisconsin Press, vol. 90(1), pages 79-99.
  • Handle: RePEc:uwp:landec:v:90:y:2014:i:1:p:79-99
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    References listed on IDEAS

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    1. Keith R. Ihlanfeldt, 2009. "Does Comprehensive Land-Use Planning Improve Cities?," Land Economics, University of Wisconsin Press, vol. 85(1), pages 74-86.
    2. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
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    15. Ron Cheung & Keith Ihlanfeldt & Tom Mayock, 2009. "The Incidence of the Land Use Regulatory Tax," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(4), pages 675-704.
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    1. repec:eee:regeco:v:68:y:2018:i:c:p:1-10 is not listed on IDEAS
    2. repec:eee:regeco:v:68:y:2018:i:c:p:130-147 is not listed on IDEAS
    3. Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2017. "Housing booms and busts and local fiscal policy," Working Papers 2017/05, Institut d'Economia de Barcelona (IEB).
    4. Bimonte, Salvatore & Stabile, Arsenio, 2015. "Local taxation and urban development. Testing for the side-effects of the Italian property tax," Ecological Economics, Elsevier, vol. 120(C), pages 100-107.
    5. Qin Fan & J. Andrew Hansz & Xiaoming Yang, 2016. "The Pricing Effects of Open Space Amenities," The Journal of Real Estate Finance and Economics, Springer, vol. 52(3), pages 244-271, April.
    6. Wendong Zhang & Cynthia J. Nickerson, 2015. "Housing Market Bust and Farmland Values: Identifying the Changing Influence of Proximity to Urban Centers," Land Economics, University of Wisconsin Press, vol. 91(4), pages 605-626.
    7. Lozano Navarro, Francisco-Javier, 2015. "Elasticidad precio de la oferta inmobiliaria en el Gran Santiago
      [Housing supply elasticity in Greater Santiago]
      ," MPRA Paper 65012, University Library of Munich, Germany.
    8. Ihlanfeldt, Keith R. & Willardsen, Kevin, 2014. "The millage rate offset and property tax revenue stability," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 167-176.
    9. Bimonte, Salvatore & Stabile, Arsenio, 2017. "Land consumption and income in Italy: a case of inverted EKC," Ecological Economics, Elsevier, vol. 131(C), pages 36-43.

    More about this item

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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