Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220
NBER Working Papers and Publications
|November 2016||Housing Demand, Cost-of-Living Inequality, and the Affordability Crisis|
with David Albouy, Yingyi Liu: w22816
Since 1970, housing's relative price, share of expenditure, and ``unaffordability'' have all grown. We estimate housing demand using a novel compensated framework over space and an uncompensated framework over time. Our specifications pass tests imposed by rationality and household mobility. Housing demand is income and price inelastic, and appears to fall with household size. We provide a numerical non-homothetic constant elasticity of substitution utility function for improved quantitative modeling. An ideal cost-of-living index demonstrates that the poor have been disproportionately impacted by rising relative rents, which have greatly amplified increases in real income inequality.
|May 2012||Housing Productivity and the Social Cost of Land-Use Restrictions|
with David Albouy: w18110
We use metro-level variation in both land and non-land input prices to test and estimate a housing production function and differences in local factor productivity. The econometric model implies that the typical cost share of land is one-third, and substitution with non-land inputs is inelastic. More stringent geographic and regulatory constraints increase housing prices relative to input costs. Disaggregated analysis finds state-level constraints are costliest, and provide a Regulatory Cost Index (RCI) independent of demand factors. Housing productivity falls with city population. The costs of land-use regulations outweigh associated quality-of-life benefits.