10.17889/E111178V1
Gyourko, Joseph
Glaeser, Edward
Replication data for: The Economic Implications of Housing Supply
ICPSR Inter-university Consortium for Political and Social Research
2018
10.1257/jep.32.1.3
10.1257/jep.32.1.3
1
In this essay, we review the basic economics of housing supply and the functioning of US housing markets to better understand the distribution of home prices, household
wealth, and the spatial distribution of people across markets. We employ a cost-based approach to gauge whether a housing market is delivering appropriately priced units.
Specifically, we investigate whether market prices (roughly) equal the costs of producing the housing unit. If so, the market is well-functioning in the sense that it efficiently
delivers housing units at their production cost. The gap between price and production cost can be understood as a regulatory tax. The available evidence suggests, but does
not definitively prove, that the implicit tax on development created by housing regulations is higher in many areas than any reasonable negative externalities associated
with new construction. We discuss two main effects of developments in housing prices: on patterns of household wealth and on the incentives for relocation to high-wage,
high-productivity areas. Finally, we turn to policy implications.