Essays on Housing Market Supply, Demand, and Regulation

Abstract

This dissertation consists of three independent chapters on questions related to housing market supply, demand, and regulation. In the first chapter, my coauthor, Suren Tavakalov, and I provide evidence that preferences for local neighborhood characteristics play an important role in shaping the political economy of residential land-use regulations. We study a land-use regulation reform in Houston, TX that granted control of housing density restrictions to property owners on city blocks. Neighborhoods with higher incomes and higher shares of non-Hispanic White residents disproportionately adopted these local restrictions. We develop a model where incumbents trade off potential gains from allowing denser housing on their lot against local spillovers from denser housing on neighboring lots. Estimated model parameters reveal large, negative local externalities from housing density that vary across incumbent socio-economic groups. In the second chapter, my coauthor, Felipe Barbieri, and I study competition in the single-family housing rental market. We documents the entry and growth of national single-family landlords in Atlanta, GA, after 2011. We show that ownership impacts rental prices using a difference-in-difference approach following a merger between large corporate landlords. We develop a model where landlords trade off rental prices against vacancy lengths under imperfect competition to understand how ownership may affect prices. Counterfactual analysis suggests that corporate landlords' higher market shares and lower vacancy costs lead to higher prices and longer vacancy durations relative to traditional `mom-and-pop' landlords. The third chapter studies the spatial determinants of gentrification. The chapter documents that previously low-price neighborhoods closest to the city center in Chicago, IL, saw the largest housing price increases, in percentage terms, from 2002-2017. There was a corresponding shift in low-wage workers away from the city center. I decompose the determinants of gentrification across a rich city geography using a quantitative spatial model. I find that increases in residential amenities near the city center are the primary driver of the observed spatial patterns of price and residential location changes.