Endogenous Gentrification and Housing Price Dynamics

The authors would like to give special thanks to Morris Davis and Fernando Ferreira for their detailed comments. The authors would also like to thank seminar participants at Chicago, Cleveland State, Duke Conference on Housing Market Dynamics, Harvard, MIT, Oberlin, Ohio State, Queen's University Conference on Housing and Real Estate Dynamics, Rochester, Stanford, Summer 2010 NBER PERE meeting, Tufts, UCLA, UIC, University of Akron, Wharton, Winter 2010 NBER EFG program meeting, Wisconsin, and the Federal Reserve Banks of Atlanta, Boston, Chicago, Cleveland, Minneapolis, and St. Louis. We are particularly indebted to Daron Acemoglu, Gary Becker, Hoyt Bleakley, V. V. Chari, Raj Chetty, Ed Glaeser, Matt Kahn, Larry Katz, Jed Kolko, Guido Lorenzoni, Enrico Moretti, Kevin Murphy, Matt Notowidigdo, John Quigley, Esteban Rossi-Hansberg, Jesse Shapiro, and Todd Sinai for their detailed comments on previous drafts of this paper. All remaining errors are our own. Guerrieri and Hurst would like to acknowledge financial support from the University of Chicago's Booth School of Business. The views expressed herein are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of Cleveland, the Federal Reserve System, or the National Bureau of Economic Research.

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• December 5, 2011