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Housing Supply and Housing Affordability: Evidence from Rents, Housing Consumption and Household Location

Abstract

Using variation across metropolitan areas in the US, we show that housing supply constraints have only modestly altered outcomes related to housing affordability—rents, house sizes, lot sizes, and household location choice—relative to their effects on house price growth between 1980 and 2016. We interpret these findings by calibrating a dynamic, spatial equilibrium model in which these outcomes are endogenous. The model matches the effects of supply constraints on most outcomes, in part because prices rise more than rents as prices capitalize future rent growth. Thus, supply constraints have had only small effects on housing affordability in the US, despite their larger effects on house prices.

Type

Working Paper

Author(s)

Charles Nathanson, Raven Molloy, Andrew Paciorek

Date Published

2020

Citations

Nathanson, Charles, Raven Molloy, and Andrew Paciorek. 2020. Housing Supply and Housing Affordability: Evidence from Rents, Housing Consumption and Household Location.

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