In Short:

Housing supply responses grow with central business district distance mostly from the increasing availability of undeveloped land, flatter land, and less regulation.

Abstract

We perform a comprehensive neighborhood-level analysis of housing supply. Predictions of floor space and housing unit supply elasticities using our estimates average 0.5 and 0.3 across all urban neighborhoods in the United States, exhibiting greater variation within than between metro regions. New construction accounts for about 50% of unit supply responses, with important additional roles for teardowns and renovations. Supply responses grow with central business district distance mostly from the increasing availability of undeveloped land, flatter land, and less regulation. Identification comes from variation in labor demand shocks to commuting destinations, as aggregated using insights from a quantitative spatial equilibrium model.

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.