TY - JOUR AU - Autor,David H. AU - Palmer,Christopher J. AU - Pathak,Parag A. TI - Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge Massachusetts JF - National Bureau of Economic Research Working Paper Series VL - No. 18125 PY - 2012 Y2 - June 2012 UR - http://www.nber.org/papers/w18125 L1 - http://www.nber.org/papers/w18125.pdf N1 - Author contact info: David Autor Department of Economics MIT, E52-371 50 Memorial Drive Cambridge, MA 02142-1347 Tel: 617/258-7698 Fax: 617/253-1330 E-Mail: dautor@mit.edu Christopher Palmer Department of Economics MIT, Room E52-391 50 Memorial Drive Cambridge, MA 02142 Tel: 617-299-6511 E-Mail: cjpalmer@mit.edu Parag Pathak MIT Department of Economics 50 Memorial Drive E52-391C Cambridge, MA 02142 Tel: 617/253-7458 E-Mail: ppathak@mit.edu M2 - featured in NBER digest on 2012-10-01 AB - 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. ER -