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Resilient Urban Housing Markets: Shocks vs. Fundamentals

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  • Amine Ouazad

Abstract

In the face of a pandemic, urban protests, and an affordability crisis, is the desirability of dense urban settings at a turning point? Assessing cities’ long term trends remains challenging. The first part of this chapter describes the short-run dynamics of the housing market in 2020. Evidence from prices and price-to-rent ratios suggests expectations of resilience. Zip-level evidence suggests a short-run trend towards suburbanization, and some impacts of urban protests on house prices. The second part of the chapter analyzes the long-run dynamics of urban growth between 1970 and 2010. It analyzes what, in such urban growth, is explained by short-run shocks as opposed to fundamentals such as education, industrial specialization, industrial diversification, urban segregation, and housing supply elasticity. This chapter’s original results as well as a large established body of literature suggest that fundamentals are the key drivers of growth. The chapter illustrates this finding with two case studies: the New York City housing market after September 11, 2001; and the San Francisco Bay Area in the aftermath of the 1989 Loma Prieta earthquake. Both areas rebounded strongly after these shocks, suggesting the resilience of the urban metropolis.

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  • Amine Ouazad, 2020. "Resilient Urban Housing Markets: Shocks vs. Fundamentals," CIRANO Working Papers 2020s-53, CIRANO.
    • Handle: RePEc:cir:cirwor:2020s-53
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    2. Francke, Marc & Korevaar, Matthijs, 2021. "Housing markets in a pandemic: Evidence from historical outbreaks," Journal of Urban Economics, Elsevier, vol. 123(C).
    3. Elisa Guglielminetti & Michele Loberto & Giordano Zevi & Roberta Zizza, 2021. "Living on my own: the impact of the Covid-19 pandemic on housing preferences," Questioni di Economia e Finanza (Occasional Papers) 627, Bank of Italy, Economic Research and International Relations Area.

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    Keywords

    Cities; Urban Economics; Resilience; Long Term Growth; Disasters;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D00 - Microeconomics - - General - - - General

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