Affordable Housing and City Welfare

Favilukis, Jack; Mabille, Pierre; Nieuwerburgh, Stijn Van

doi:10.3386/w25906

Cited by 36 publications

(11 citation statements)

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“…We also find that properties that exceeded a sufficiently high level of development depreciated relative to similar non-upzoned properties, indicating that upzoning can have an immediate depreciative effect on pre-existing high intensity housing. Although this is consistent with the market anticipating future construction of intensive housing, concerns remain regarding the capacity for upzoning to generate an increase in construction sufficient to significantly reduce house prices (Favilukis et al, 2019) or improve housing affordability for middle and lower income households (Rodriguez-Pose and Storper, 2020; Wetzstein, 2019). Thus, the long-run impact of the AUP on house prices and affordability hinges on a variety of additional factors that merit further investigation.…”

Section: Resultsmentioning

confidence: 59%

“…On the basis of this and other work, many researchers argue that a relaxation of LURs will improve affordability and accessibility by enabling more housing construction (Freeman and Schuetz, 2017; Glaeser and Gyourko, 2003; Manville et al, 2020). Yet, many others remain sceptical of the capacity for upzoning to deliver affordable housing, arguing that benefits to lower-income households are limited (Favilukis et al, 2019; Rodriguez-Pose and Storper, 2020). Part of the problem is that our understanding of the manifold impact of upzoning on prices is limited by an acute lack of empirical research on the topic (Freeman and Schuetz, 2017; Schill, 2005).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Other researchers instead advocate for direct state intervention. Wetzstein (2019) argues that non-market-based housing supply, demand-side interventions and urban land market interventions are required to ensure housing affordability, while Favilukis et al (2019) show that direct state-led interventions, such as vouchers and accurately targeted inclusionary zoning, more effectively enhance affordability in a calibrated spatial equilibrium model. Meanwhile Been et al (2019) argue for a broad policy package that includes both state intervention and the removal of impediments to market-led construction.…”

Section: Literature Reviewmentioning

confidence: 99%

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The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand

2020

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We study the short-run effects of a large-scale upzoning on house prices and redevelopment premiums in Auckland, New Zealand. Upzoning significantly increases the redevelopment premium but the overall effect on house prices depends on the economic potential for site redevelopment, with underdeveloped properties appreciating relative to intensively developed properties. Notably, intensively developed properties decrease in value relative to similar dwellings that were not upzoned, showing that the large-scale upzoning had an immediate depreciative effect on pre-existing intensive housing. Our results show that the economic potential for site redevelopment is fundamental to understanding the impact of changes in land use regulations on property values.

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Section: Resultsmentioning

confidence: 59%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand

2020

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“…For example, Somerville (1999) finds that higher construction costs reduce residential construction. The rising construction costs may create an affordability crisis through rising house prices (Favilukis et al , 2019; Wetzstein, 2019). Linear relation between construction cost and house price (Jud and Winkler, 2002; Karol, 2009; Coskun et al , 2020) implies a potential negative relation between COST and housing affordability (Glaeser and Gyourko, 2003).…”

Section: Theoretical and Empirical Literature Reviewmentioning

confidence: 99%

Housing affordability: an econometric framing for policy discussions

Coşkun

2022

IJHMA

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Purpose The purpose of this study is to analyze short- and long-run market-sensitive drivers of housing affordability. The study highlights an ongoing housing affordability crisis in an emerging market context by also providing an empirical tool to combat the crisis. Design/methodology/approach To investigate determinants of uniquely constructed effective housing affordability index and house price to income ratio index, the author uses a bound testing approach to cointegration and error correction models, besides causality tests, variance decompositions and impulse response functions. This study uses Turkish data for the period of 2007 M06 and 2017 M12. Findings The evidence suggests that the housing affordability crisis is mainly driven by credit expansion, rent and construction costs. A sensible housing policy response would target these variables. This evidence suggests that housing affordability mostly depends on housing market dynamics rather than policies because of the exogeneous/cyclical natures of the drivers. Research limitations/implications Data constraints shape the study. A regional or an aggregate-level panel study cannot be developed because of a lack of data. This limitation inevitably results in the exclusion of relevant socio-economic/political factors and is also the main reason for the lack of comparative analysis in a cross-country setting. Practical implications This study argues that dependency on neoliberal housing market practices seems the underlying reason for the lack of efficient policy answers and the ongoing affordability crisis. From a policymaking perspective, the study suggests that necessary policy measures to resolve the housing affordability crisis may give a specific emphasis on housing rent, housing credit volume and construction costs as the major components of the crisis. Originality/value This study develops a novel measure and presents a new conceptual framework by combining quantitative research methods and policymaking in housing affordability. In this respect, to the best of the author’s knowledge, this is the first work to comparatively investigate the determinants of uniquely developed monthly housing affordability measurements.

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“…Much of this work focuses on regional effects and uses models rather than quasi-experimental strategies. Favilukis, Mabille, and Van Nieuwerburgh (2019) and Nathanson (2019) develop calibrated spatial equilibrium models and find that new housing supply promotes regional affordability. Mast (2019) traces the sequence of moves induced by new construction to show that new construction loosens lower-income housing markets throughout a region.…”

Section: Introductionmentioning

confidence: 99%

Supply Shock Versus Demand Shock: The Local Effects of New Housing in Low-Income Areas

2019

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We study the local effects of new market-rate housing in low-income areas using microdata on large apartment buildings, rents, and migration. New buildings decrease nearby rents by 5 to 7 percent relative to locations slightly farther away or developed later, and they increase in-migration from low-income areas. Results are driven by a large supply effect-we show that new buildings absorb many high-income households-that overwhelms any offsetting endogenous amenity effect. The latter may be small because most new buildings go into already-changing areas. Contrary to common concerns, new buildings slow local rent increases rather than initiate or accelerate them. JEL Codes: R21, R23, R31 the regional and local effects of new housing construction. It benefits both.Causal identification in this setting is challenging because developers select the locations of new buildings based in part on unobserved local characteristics and trends. In addition, the size and shape of a new building's amenity or reputation effects is unknown, making it difficult to know where they may shrink or reverse the negative effect of added supply. We attempt to overcome these challenges by leveraging our unique data to construct three related empirical strategies. The first is a difference-in-differences specification that compares the area very close to a new building to the area slightly farther away (our "near-far" specification). 4 The idea is that frictions in the land assembly and development approval processes lead to random variation in building placement and timing at the hyper-local level, making the outer area a good control for the treated inner area. This specification is well suited to detect one way that new buildings could raise rents-through amenity effects that fade out quickly with distance, such as increased retail options or the replacement of a vacant lot.The second exercise is a difference-in-differences that compares listings near buildings completed in 2015 and 2016 to listings near buildings completed in 2019, after the conclusion of our sample (our "near-near" specification). The underlying logic is that developers choose sites in both groups for similar reasons, but one building is completed before the other for idiosyncratic reasons, such as the timing of when sites are available for purchase. Because the treatment and control areas are not necessarily in the same neighborhood, this specification can detect price changes driven by broader effects that may cross the near-far boundary of the first exercise. A variant of this specification also allows us to examine how congestion effects near the building could influence our results. Finally, we combine both sources of variation into a triple-difference specification that effectively compares the near-far difference around 2015-2016 buildings to the near-far difference around 2019 buildings.We first study the effect on rents using listing-level data from Zillow ™ that span 2013 to 2018. All three empirical approaches show that new construction in low-income neighbo...

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Affordable Housing and City Welfare

Cited by 36 publications

References 1 publication

The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand

The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand

Housing affordability: an econometric framing for policy discussions

Supply Shock Versus Demand Shock: The Local Effects of New Housing in Low-Income Areas

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