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House Prices, Housing Development Costs, and the Supply of New Single-Family Housing in German Counties and Cities

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  • Oliver Lerbs

Abstract

This paper employs panel data on 413 German counties and cities from 2004 to 2009 to investigate the supply of new single-family housing in local housing markets. New local housing supply is measured by the annual number of construction permits in relation to the existing single-family housing stock. This supply indicator is econometrically related to existing home prices and new housing development costs, which include the costs of housing construction and vacant land in a given location. The results suggest that both higher prices for existing homes and recent increases in development costs are positively associated with local single-family home permit rates. Instead, higher levels of development costs turn out to dampen construction activity. The average local price elasticity of new single-family home supply is considerably less than one, with surprising differences across the urban hierarchy.

Suggested Citation

  • Oliver Lerbs, "undated". "House Prices, Housing Development Costs, and the Supply of New Single-Family Housing in German Counties and Cities," Working Papers 201283, Institute of Spatial and Housing Economics, Munster Universitary.
  • Handle: RePEc:muc:wpaper:201283
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    References listed on IDEAS

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    Cited by:

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    2. Cardullo, Gabriele & Sechi, Agnese, 2023. "Local Labor Markets with Non-homothetic Preferences," IZA Discussion Papers 16533, Institute of Labor Economics (IZA).
    3. 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.
    4. Dirk Drechsel & Stefan Neuwirth, 2016. "Taming volatile high frequency data with long lag structure: An optimal filtering approach for forecasting," KOF Working papers 16-407, KOF Swiss Economic Institute, ETH Zurich.

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    More about this item

    Keywords

    New housing supply; local housing markets; panel data;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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