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Rent stabilization and the long-run supply of housing

Author

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  • Alastair McFarlane

    (U.S. Department of Housing and Urban Development)

Abstract

This study contributes to the understanding of how the construction and replacement of urban housing may be affected by rent stabilization. One of the primary insights is that neither the timing nor the density of development will be affected by rent stabilization because allowing perfectly flexible base rents permits landlords to capture all of the advantages of a rent growth control. However, redevelopment is hastened because rent stabilization complemented by vacancy decontrol increases the difference between rents before and after redevelopment, increasing the opportunity costs of postponing redevelopment. Extensions include an analysis of other common rent regulations and the impact of rent stabilization on the urban rent gradient.

Suggested Citation

  • Alastair McFarlane, 2001. "Rent stabilization and the long-run supply of housing," Urban/Regional 0109001, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0109001
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    References listed on IDEAS

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    1. Basu, Kaushik & Emerson, Patrick M, 2000. "The Economics of Tenancy Rent Control," Economic Journal, Royal Economic Society, vol. 110(466), pages 939-962, October.
    2. Heffley, Dennis, 1998. "Landlords, tenants and the public sector in a spatial equilibrium model of rent control," Regional Science and Urban Economics, Elsevier, vol. 28(6), pages 745-772, November.
    3. Brueckner, Jan K., 1980. "A vintage model of urban growth," Journal of Urban Economics, Elsevier, vol. 8(3), pages 389-402, November.
    4. Malpezzi, S. & Ball, G., 1992. "Rent Control in Developing Countries," World Bank - Discussion Papers 129, World Bank.
    5. Richard Arnott, 1997. "Rent Control," Boston College Working Papers in Economics 391., Boston College Department of Economics.
    6. Braid, Ralph M., 2001. "Spatial Growth and Redevelopment with Perfect Foresight and Durable Housing," Journal of Urban Economics, Elsevier, vol. 49(3), pages 425-452, May.
    7. 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.
    8. Skelley, Chris, 1998. "Rent control and complete contract equilibria," Regional Science and Urban Economics, Elsevier, vol. 28(6), pages 711-743, November.
    9. Mark Frankena, 1975. "Alternative Models of Rent Control," Urban Studies, Urban Studies Journal Limited, vol. 12(3), pages 303-308, October.
    10. Nagy, John, 1997. "Do Vacancy Decontrol Provisions Undo Rent Control?," Journal of Urban Economics, Elsevier, vol. 42(1), pages 64-78, July.
    11. Amin Kaushik & Capozza Dennis R., 1993. "Sequential Development," Journal of Urban Economics, Elsevier, vol. 34(2), pages 142-158, September.
    12. Brueckner, Jan K., 1981. "A dynamic model of housing production," Journal of Urban Economics, Elsevier, vol. 10(1), pages 1-14, July.
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    Cited by:

    1. Ashot Tsharakyan & Martin Janíčko, 2010. "The Binding Credit Constraints and the Welfare Effects of Housing Price Appreciation," Prague Economic Papers, University of Economics, Prague, vol. 2010(4), pages 359-382.

    More about this item

    Keywords

    rent control; residential development;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate 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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