IDEAS home Printed from https://ideas.repec.org/p/arz/wpaper/eres2008_241.html
   My bibliography  Save this paper

On Local Housing Supply Elasticity

Author

Listed:
  • Albert Saiz

Abstract

Housing markets have been established as fundamental to our understanding of business cycles, labor mobility, household wealth accumulation, portfolio allocation, and urban dynamics. Housing supply is a key element to explain housing price levels and fluctuations and recent literature argues about the extent to which residential land regulations drive housing price changes. However, research has failed to treat regulation as endogenous to the housing market equilibrium, and to local attributes that have an independent impact on housing supply. In this paper I use new US data about the local extent of restrictive housing development regulations and a wealth of institutional and demographic variables for the metropolitan areas of the United States. I give empirical content to the concept o land availability by processing satellite-generated data on elevation and presence of water bodies to precisely estimate the amount of developable land in each metro area . I demonstrate that development is effectively curtailed by the presence of slopes above 15% and that most areas that are widely regarded as supply-inelastic are, in fact, severely land-constrained by their topography. Furthermore, the extent of topographical constraints correlates positively ands strongly with regulatory barriers to development. I estimate a system of equations where housing prices, construction, and regulations are all determined endogenously. Housing supply elasticities can be wellcharacterized as functions of both physical and regulatory constraints, which in turn are endogenous to prices and past growth. The results provide operational estimates of local supply elasticities in all major US metropolitan areas.

Suggested Citation

  • Albert Saiz, 2008. "On Local Housing Supply Elasticity," ERES eres2008_241, European Real Estate Society (ERES).
  • Handle: RePEc:arz:wpaper:eres2008_241
    as

    Download full text from publisher

    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2008-241
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arz:wpaper:eres2008_241. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Architexturez Imprints (email available below). General contact details of provider: https://edirc.repec.org/data/eressea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.