Empirical analyses of local housing markets

This dissertation consists of three essays on the local regulation of housing supply and its influence on house price volatility. I begin by describing the local supply-side dynamics of housing price and stock in each of 47 U.S. metropolitan area housing markets using a unique, market-level panel dataset. The data are analyzed with a conditional vector-autoregression, which characterizes the dynamic responses of price and stock to an increase in housing demand caused by a shift in employment. These response time-paths are used to create measures of short-, medium- and long-run supply elasticities. Both the time-paths and the implied elasticities vary widely. I use several area characteristics to explain the variation in the supply elasticity measures across metropolitan areas. The results suggest that governments with a greater incentive to regulate housing have a slower house-price response. This directly contradicts the predictions of the existing land-use literature. In order to explain the result, William C. Wheaton and I formalize a general equilibrium theory of a housing market whose local governments determine house price by regulating their supplies of land. The regulatory decisions are made by current residents who already own housing, but the impact of these decisions on prices is determined by new entrants who must purchase housing. The choice of how much to regulate is shown to vary by town size, existing town density, and the amount of open land currently available for development. This is broadly consistent with the results of recent empirical research.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2002

Author dc:creator

• Evenson, Bengte, 1975-

Advisor dc:contributor.advisor

• William C. Wheaton and Sendhil Mullainathan.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/8411

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/8411