NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge Massachusetts

David H. Autor, Christopher J. Palmer, Parag A. Pathak

NBER Working Paper No. 18125
Issued in June 2012
NBER Program(s):   LS   PE

Understanding potential spillovers from the attributes and actions of neighborhood residents onto the value of surrounding properties and neighborhoods is central to both the theory of urban economics and the development of efficient housing policy. This paper measures the capitalization of housing market spillovers by studying the sudden and largely unanticipated 1995 elimination of stringent rent controls in Cambridge, Massachusetts that had previously muted landlords' investment incentives and altered the assignment of residents to locations. Pooling administrative data on the assessed values of each residential property and the prices and characteristics of all residential transactions between 1988 and 2005, we find that rent control's removal produced large, positive, and robust spillovers onto the price of never-controlled housing from nearby decontrolled units. Elimination of rent control added about $1.8 billion to the value of Cambridge's housing stock between 1994 and 2004, equal to nearly a quarter of total Cambridge residential price appreciation in this period. Positive spillovers to never-controlled properties account for more half of the induced price appreciation. Residential investments can explain only a small fraction of the total.

A non-technical summary of this paper is available in the October 2012 NBER digest.  You can sign up to receive the NBER Digest by email.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18125

Users who downloaded this paper also downloaded these:
Levitt, List, Neckermann, and Sadoff w18165 The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance
Borenstein and Kellogg w18127 The Incidence of an Oil Glut: Who Benefits from Cheap Crude Oil in the Midwest?
Glaeser and Luttmer w6220 The Misallocation of Housing Under Rent Control
Pope and Pope w18111 When Walmart Comes to Town: Always Low Housing Prices? Always?
Pinkowitz, Stulz, and Williamson w18120 Multinationals and the High Cash Holdings Puzzle
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us