Stijn Van Nieuwerburgh Studies How Urban Rent Gradients Have Flattened During the Pandemic
Rents and housing prices are usually highest at the center of dense urban areas, reflecting the value that residents place on short commutes and proximity to cultural amenities, shopping, and restaurants. The decline in rents with distance from center cities is know as the "rent gradient." House prices display a similar pattern. The COVID-19 pandemic has shuttered many of the businesses and institutions that city-dwellers value, and turned density from a positive to a negative community attribute. The coincident rise in work from home has eliminated the value of short commutes to downtown for many individuals. The result has been a decline in rents in center cities relative to those in lower-density, more-suburban areas. NBER Research Associate Stijn Van Nieuwerburgh of Columbia Business School, along with Arpit Gupta, Vrinda Mittal, and Jonas Peeters, studies the evolution of rent- and price-gradients in 30 large metropolitan areas over the last three years (28675). Pre-pandemic, the researchers find clear evidence of declining rents and house prices as distance to downtowns rises, but the rent gradient began to decline in March 2020 and was nearly gone by year’s end. The house price gradient declined much less. Van Nieuwerburgh summarizes these findings in the video above. An archive of NBER videos on pandemic-related research may be found here.