Take Action
Research Details
Housing Supply and Housing Affordability: Evidence from Rents, Housing Consumption and Household Location, Journal of Urban Economics
Abstract
We examine the effects of housing supply constraints on housing affordability, which we measure directly using quality-adjusted rent as well as indirectly using structure sizes, lot sizes and household location choices. Empirically, we find that housing supply constraints have only modest effects on rents and housing consumption despite their larger effects on city growth and the price to purchase homes. Calibration of a dynamic, spatial equilibrium model shows that supply constraints increase price-rent ratios because investors expect future rents to increase more with expected demand growth. Because rent is what matters for affordability, supply constraints have reduced affordability less than is commonly understood despite their sizable effects on the purchase prices of homes.
Type
Article
Author(s)
Charles Nathanson, Raven Molloy, Andrew Paciorek
Date Published
2022
Citations
Nathanson, Charles, Raven Molloy, and Andrew Paciorek. 2022. Housing Supply and Housing Affordability: Evidence from Rents, Housing Consumption and Household Location. Journal of Urban Economics.