New housing supply: what do we know and how can we learn more?
This paper reviews the literature on new housing supply. The paper starts by summarizing the results of the empirical studies on housing supply, showing that overall these studies reject the hypothesis of a perfectly elastic housing supply and reveal that housing supply is negatively related with financial costs, inflation and sales delay while showing inconclusive results with respect to the construction costs. In addition, we review a recent branch of the literature on housing supply that uses strategic interaction models. There is evidence that the housing market is not well described by the perfect competition model. Thus, a deeper understanding of housing supply can be achieved by considering theoretical models that take into account the strategic interaction between land developers and by using data where the unit of analysis is the land developer.
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The Quarterly Journal of Economics,
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- Ko Wang & Yuqing Zhou, 2000. "Overbuilding: A Game-Theoretic Approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(3), pages 493-522.
- Falk, Barry L. & Lee, Bong-Soo, 2004. "The Inventory-Sales Relationship in the Market for New Single-Family Homes," Staff General Research Papers 12006, Iowa State University, Department of Economics.
- Topel, Robert H & Rosen, Sherwin, 1988. "Housing Investment in the United States," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 718-40, August.
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- Seow Eng Ong & Tien Foo Sing & Lai Choo Malone‐Lee, 2004. "Strategic considerations in land use planning: the case of white sites in Singapore," Journal of Property Research, Taylor & Francis Journals, vol. 21(3), pages 235-253, December.
- Capozza, Dennis R. & Helsley, Robert W., 1989. "The fundamentals of land prices and urban growth," Journal of Urban Economics, Elsevier, vol. 26(3), pages 295-306, November.
- Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 1999.
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Wisconsin-Madison CULER working papers
99-16, University of Wisconsin Center for Urban Land Economic Research.
- Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 2005. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," American Economic Review, American Economic Association, vol. 95(2), pages 334-339, May.
- Barry Falk & Bong-Soo Lee, 2004. "The Inventory-Sales Relationship in the Market for New Single-Family Homes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(4), pages 645-672, December.
- Anglin, Paul M & Arnott, Richard, 1991. "Residential Real Estate Brokerage as a Principal-Agent Problem," The Journal of Real Estate Finance and Economics, Springer, vol. 4(2), pages 99-125, June.
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- YongQiang Chu & Tien Sing, 2007. "Optimal Timing of Real Estate Investment under an Asymmetric Duopoly," The Journal of Real Estate Finance and Economics, Springer, vol. 34(3), pages 327-345, April.
- Didier Baudewyns, 2000. "Opening the black box of strategic interactions of land developpers," ULB Institutional Repository 2013/9163, ULB -- Universite Libre de Bruxelles.
- Fathali Firoozi & Daniel R. Hollas & Ronald C. Rutherford & Thomas A. Thomson, 2006. "Property Assessments and Information Asymmetry in Residential Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 28(3), pages 275-292.
- Malpezzi, Stephen & Maclennan, Duncan, 2001. "The Long-Run Price Elasticity of Supply of New Residential Construction in the United States and the United Kingdom," Journal of Housing Economics, Elsevier, vol. 10(3), pages 278-306, September.
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