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The Home Front: Rent control and the rapid wartime increase in home ownership

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  • Daniel Fetter

    () (Wellesley College)

Abstract

The US home ownership rate rose by 10 percentage points between 1940 and 1945, about half the size of the net change over the 20th century, despite severe restrictions on construction during World War II. I present evidence that wartime rent control which covered over 80 percent of the 1940 U.S. rental housing stock played an important role in this shift, as suggested by Friedman and Stigler (1946). The empirical test exploits features of the central authority's method of imposing rent control, which generated variation in the size of rent reductions for cities that had seen similar increases in rents prior to control. Greater rent reductions were associated with greater increases in home ownership over the rst half of the 1940's. This relationship does not appear to be driven by di erential trends in housing demand or other unobserved factors potentially correlated with variation in rent reductions. The estimates suggest that rent control may explain 65 percent of the urban increase in home ownership over the rst half of the 1940's.

Suggested Citation

  • Daniel Fetter, 2013. "The Home Front: Rent control and the rapid wartime increase in home ownership," Discussion Papers 13-005, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:13-005
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    References listed on IDEAS

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    1. Franz Hubert, 1993. "The Impact of Rent Control on Rents in the Free Sector," Urban Studies, Urban Studies Journal Limited, vol. 30(1), pages 51-61, February.
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    4. Hackner, Jonas & Nyberg, Sten, 2000. " Rent Control and Prices of Owner-Occupied Housing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 311-324, June.
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    7. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2014. "Did Housing Policies Cause the Postwar Boom in Home Ownership?," NBER Chapters,in: Housing and Mortgage Markets in Historical Perspective, pages 351-385 National Bureau of Economic Research, Inc.
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    Cited by:

    1. David H. Autor & Christopher J. Palmer & Parag A. Pathak, 2014. "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 661-717.
    2. Sebastian Kohl, 2016. "Urban History Matters: Explaining the German--American Homeownership Gap," Housing Studies, Taylor & Francis Journals, vol. 31(6), pages 694-713, September.
    3. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, Elsevier.

    More about this item

    JEL classification:

    • N00 - Economic History - - General - - - General
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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