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The Home Front: Rent control and the rapid wartime increase in home ownership

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  • Daniel Fetter

    (Wellesley College)

Abstract
The US home ownership rate rose by 10 percentage points between 1940 and 1945, about half the size of the net change over the 20th century, despite severe restrictions on construction during World War II. I present evidence that wartime rent control which covered over 80 percent of the 1940 U.S. rental housing stock played an important role in this shift, as suggested by Friedman and Stigler (1946). The empirical test exploits features of the central authority's method of imposing rent control, which generated variation in the size of rent reductions for cities that had seen similar increases in rents prior to control. Greater rent reductions were associated with greater increases in home ownership over the rst half of the 1940's. This relationship does not appear to be driven by di erential trends in housing demand or other unobserved factors potentially correlated with variation in rent reductions. The estimates suggest that rent control may explain 65 percent of the urban increase in home ownership over the rst half of the 1940's.

Suggested Citation

  • Daniel Fetter, 2013. "The Home Front: Rent control and the rapid wartime increase in home ownership," Discussion Papers 13-005, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:13-005
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Rent control and home ownership
      by Economic Logician in Economic Logic on 2013-11-29 21:48:00

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    Cited by:

    1. Kholodilin, Konstantin A., 2024. "Rent control effects through the lens of empirical research: An almost complete review of the literature," Journal of Housing Economics, Elsevier, vol. 63(C).
    2. Carola Frydman & Raven Molloy, 2024. "A Real Great Compression: Inflation and Inequality in the 1940s," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.
    3. Stephen Malpezzi, 2023. "Housing affordability and responses during times of stress: A preliminary look during the COVID‐19 pandemic," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 9-40, January.
    4. Price V. Fishback & Andrew J. Seltzer, 2021. "The Rise of American Minimum Wages, 1912–1968," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 73-96, Winter.
    5. Konstantin A. Kholodilin, 2022. "Rent Control Effects through the Lens of Empirical Research," DIW Roundup: Politik im Fokus 139, DIW Berlin, German Institute for Economic Research.
    6. Sebastian Kohl, 2016. "Urban History Matters: Explaining the German--American Homeownership Gap," Housing Studies, Taylor & Francis Journals, vol. 31(6), pages 694-713, September.
    7. David H. Autor & Christopher J. Palmer & Parag A. Pathak, 2014. "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 661-717.
    8. Joan Monràs & José Garcia Montalvo, 2021. "The effect of second generation rent controls: New evidence from Catalonia," Economics Working Papers 1836, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2022.
    9. Gandhi, Sahil & Green, Richard K. & Patranabis, Shaonlee, 2022. "Insecure property rights and the housing market: Explaining India’s housing vacancy paradox," Journal of Urban Economics, Elsevier, vol. 131(C).
    10. Konstantin A. Kholodilin & Sebastian Kohl, 2021. "Rent Price Control – Yet Another Great Equalizer of Economic Inequalities?: Evidence from a Century of Historical Data," Discussion Papers of DIW Berlin 1927, DIW Berlin, German Institute for Economic Research.
    11. William J. Collins & Gregory T. Niemesh, 2024. "Income Gains and the Geography of the US Home Ownership Boom, 1940 to 1960," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.
    12. Breidenbach, Philipp & Eilers, Lea & Fries, Jan, 2022. "Temporal dynamics of rent regulations – The case of the German rent control," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    13. Konstantin Kholodilin & Sebastian Kohl, 2019. "Verdrängung oder Sozialpolitik? Einfluss von Regulierungen auf die Wohneigentumsquote [Social Policy or Crowding-out? The Effect of Private-tenancy Regulation on Homeownership]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 99(5), pages 363-366, May.
    14. Stephen Malpezzi, 2021. "Housing “Affordability” and Responses During Times of Stress: A Brief Global Review," GRU Working Paper Series GRU_2021_011, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    15. Konstantin A. Kholodilin & Sebastian Kohl, 2020. "Does Social Policy through Rent Controls Inhibit New Construction? Some Answers from Long-Run Historical Evidence," Discussion Papers of DIW Berlin 1839, DIW Berlin, German Institute for Economic Research.
    16. Konstantin A. Kholodilin, 2022. "Rent Control Effects through the Lens of Empirical Research: An almost Complete Review of the Literature," Discussion Papers of DIW Berlin 2026, DIW Berlin, German Institute for Economic Research.
    17. Ronan C. Lyons & Allison Shertzer & Rowena Gray & David N. Agorastos, 2024. "The Price of Housing in the United States, 1890-2006," NBER Working Papers 32593, National Bureau of Economic Research, Inc.
    18. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 887-986, Elsevier.

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    More about this item

    JEL classification:

    • N00 - Economic History - - General - - - General
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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