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Project Citation: 

Howard, Greg, and Liebersohn, Jack. Data and Code for “Why is the Rent so Darn High? The Role of Growing Demand to Live in Housing-Supply-Inelastic Regions.” Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-06-18.

Project Description

Summary:  View help for Summary
Real rents measured in the United States CPI increased 17.4 log-points from 2000-2018. We present a spatial equilibrium framework to decompose the increase into several channels, including demand to live in housing-supply-inelastic cities. We find location demand contributed significantly: using parameterizations from the literature and a new rent index, we find it is responsible for between 17 and 73 percent of the overall rent increase, and an even larger share in cities where CPI is measured. The wide range is primarily due to a lack of consensus over the population elasticity to rents, so we estimate it by comparing the effects of demand shocks across cities of differing housing supply elasticities. We find that demand changes have similar effects across cities, suggesting a high population elasticity. Therefore, our preferred estimate is that location demand accounts for more than half of the increase. We discuss implications for housing supply policy. 

Scope of Project

Geographic Coverage:  View help for Geographic Coverage United States
Time Period(s):  View help for Time Period(s) 2000 – 2018


Geographic Unit:  View help for Geographic Unit MSA

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