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Local economic conditions and the nature of new housing supply

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  • Hilber, Christian A. L.
  • Rouwendal, Jan
  • Vermeulen, Wouter

Abstract

We explore the effects of local economic conditions on the type and size of newly constructed housing units in a city. Exploiting the 1984–2004 metro area samples of the American Housing Survey and US Census building permit data from 1980 to 2018, we find that positive local income shocks (i) increase a city’s share of multi-family housing in new construction and (ii) trigger the construction of smaller units. These responses are driven by migration. Our findings are consistent with a modified open monocentric city model that more realistically assumes land is available for conversion into new housing throughout the city.

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  • Hilber, Christian A. L. & Rouwendal, Jan & Vermeulen, Wouter, 2020. "Local economic conditions and the nature of new housing supply," LSE Research Online Documents on Economics 105238, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:105238
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    Cited by:

    1. Gyourko, Joseph & Molloy, Raven, 2015. "Regulation and Housing Supply," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1289-1337, Elsevier.
    2. Nikolay Kurichev & Ekaterina Kuricheva, 2020. "Interregional migration, the housing market, and a spatial shift in the metro area: Interrelationships in the case study of Moscow," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(4), pages 689-703, August.
    3. Michael Ball, 2008. "UK Planning Controls and the Market Responsiveness of Housing Supply," Real Estate & Planning Working Papers rep-wp2008-13, Henley Business School, University of Reading.
    4. N. K. Kurichev & E. K. Kuricheva, 2018. "Regional Differentiation of Buyers’ Activity in the Primary Housing Market of the Moscow Agglomeration," Regional Research of Russia, Springer, vol. 8(4), pages 322-333, October.
    5. Molloy, Raven, 2020. "The effect of housing supply regulation on housing affordability: A review," Regional Science and Urban Economics, Elsevier, vol. 80(C).

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    More about this item

    Keywords

    local economic conditions; open monocentric city model; land conversion; housing supply; housing type; housing consumption; land use regulation; migration and relative unit labour costs;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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