Residential Construction: Using the Urban Growth Model to Estimate Housing Supply
Posted: 17 Jul 2000
Abstract
This article presents an empirical model of housing supply derived from urban growth theory. This approach describes new housing construction as a function of changes in house prices and costs rather than as a function of the levels of those variables, which previous studies have used. Empirical tests support this specification over the leading alternative models. Our estimates show that a 10% rise in real prices leads to an 0.8% increase in the housing stock, which is accomplished by a temporary 60% increase in the annual number of starts, spread over four quarters.
JEL Classification: R31
Suggested Citation: Suggested Citation
Mayer, Christopher J. and Somerville, C. Tsuriel, Residential Construction: Using the Urban Growth Model to Estimate Housing Supply. Available at SSRN: https://ssrn.com/abstract=232647
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.