In Short:

It is important to incorporate considerations of various policy instruments that may influence housing supply and affordability.

Abstract

The decline in housing affordability over recent decades has promoted an enhanced interest in housing supply. This chapter presents descriptive evidence about the evolution of US housing prices, quantities, and regulations since 1980, indicating that supply constraints appear to be increasingly binding. We then provide an overview of the various approaches used to model construction and land development for homogeneous and heterogeneous housing in static and dynamic contexts to understand housing supply. Our treatment incorporates empirical implementation and policy implications throughout. Finally, we provide an overview of quantitative evidence on the consequences of relaxing various types of supply constraints.

About the author

Nathaniel Baum-Snow

Professor, School of Government and Policy

Nathaniel Baum-Snow is an urban economist with a wide range of urban policy research interests, including in housing and real estate, transportation, the operation of urban labor markets, and local economic development.