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Supply Skepticism: Housing Supply and Affordability

Author

Listed:
  • Vicki Been
  • Ingrid Gould Ellen
  • Katherine O’Regan
Abstract
Growing numbers of affordable housing advocates and community members are questioning the premise that increasing the supply of market-rate housing will result in housing that is more affordable. Economists and other experts who favor increases in supply have failed to take these supply skeptics seriously. But left unanswered, supply skepticism is likely to continue to feed local opposition to housing construction, and further increase the prevalence and intensity of land-use regulations that limit construction. This article is meant to bridge the divide, addressing each of the key arguments supply skeptics make and reviewing what research has shown about housing supply and its effect on affordability. We ultimately conclude, from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families. We argue further that there are additional reasons to be concerned about inadequate supply response and assess the evidence on those effects of limiting supply, including preventing workers from moving to areas with growing job opportunities. Finally, we conclude by emphasizing that new market-rate housing is necessary but not sufficient. Government intervention is critical to ensure that supply is added at prices affordable to a range of incomes.

Suggested Citation

  • Vicki Been & Ingrid Gould Ellen & Katherine O’Regan, 2019. "Supply Skepticism: Housing Supply and Affordability," Housing Policy Debate, Taylor & Francis Journals, vol. 29(1), pages 25-40, January.
    • Handle: RePEc:taf:houspd:v:29:y:2019:i:1:p:25-40
    DOI: 10.1080/10511482.2018.1476899
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Skyscrapers, Housing, and Cities: A Q&A Interview with Ingrid Gould Ellen (Part II)
      by Jason Barr in Skynomics Blog on 2019-07-01 11:55:38
    2. New Yimby City: A Roundtable Q&A with Open New York (Part I)
      by Jason Barr in Skynomics Blog on 2021-04-05 12:11:16
    3. Six Policy Ideas for the Next Mayor of New York City
      by Jason Barr in Skynomics Blog on 2021-06-22 12:11:35
    4. Urban Umami or Urban Appakukan?: The Psychology of Streetscapes
      by Jason Barr in Skynomics Blog on 2020-10-22 12:34:19

    Citations

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    Cited by:

    1. Bratu, Cristina & Harjunen, Oskari & Saarimaa, Tuukka, 2023. "JUE Insight: City-wide effects of new housing supply: Evidence from moving chains," Journal of Urban Economics, Elsevier, vol. 133(C).
    2. Jung Sakong, 2021. "Effect of Ownership Composition on Property Prices and Rents: Evidence from Chinese Investment Boom in US Housing Markets," Working Paper Series WP-2021-12, Federal Reserve Bank of Chicago.
    3. Ismail, Mohammad & Wilhelmsson, Mats, 2022. "New housing investments' effects on gentrification and affordability in Stockholm, Sweden," Working Paper Series 22/8, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    4. Tongtong Qiu & Siliang Wang, 2024. "Housing Tenure, Intrahousehold Homeownership Structure and Health," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 19(4), pages 2035-2062, August.
    5. Dionissi Aliprantis & Hal Martin & Kristen Tauber, 2020. "What Determines the Success of Housing Mobility Programs?," Working Papers 20-36R, Federal Reserve Bank of Cleveland, revised 19 Oct 2022.
    6. Antti Kurvinen & Arto Saari, 2020. "Urban Housing Density and Infrastructure Costs," Sustainability, MDPI, vol. 12(2), pages 1-24, January.
    7. Hilber, Christian A. L. & Mense, Andreas, 2021. "Why have house prices risen so much more than rents in superstar cities?," LSE Research Online Documents on Economics 112668, London School of Economics and Political Science, LSE Library.
    8. Cavicchia, Rebecca, 2023. "Housing accessibility in densifying cities: Entangled housing and land use policy limitations and insights from Oslo," Land Use Policy, Elsevier, vol. 127(C).
    9. Huifu Nong, 2024. "Integration and risk transmission across supply, demand, and prices in China’s housing market," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-28, June.
    10. Heidi Artigue & Jeffrey Brinkman & Svyatoslav Karnasevych, 2022. "The Push of Big City Prices and the Pull of Small Town Amenities," Working Papers 22-41, Federal Reserve Bank of Philadelphia.
    11. Murray, Cameron, 2022. "What’s the rush? New housing market absorption rate metrics and the incentive to slow housing supply," OSF Preprints xscg5, Center for Open Science.
    12. Brian Asquith & Evan Mast & Davin Reed, 2019. "Supply Shock Versus Demand Shock: The Local Effects of New Housing in Low-Income Areas," Upjohn Working Papers 19-316, W.E. Upjohn Institute for Employment Research.
    13. Rumbach, Andrew & Sullivan, Esther & McMullen, Shelley & Makarewicz, Carrie, 2022. "You don’t need zoning to be exclusionary: Manufactured home parks, land-use regulations and housing segregation in the Houston metropolitan area," Land Use Policy, Elsevier, vol. 123(C).
    14. Josef Klement & Jan Kozák, 2022. "Vliv prostorové regulace na nabídku nového bydlení v České republice [Impact of Spatial Regulation on New Housing Supply in Czechia]," Politická ekonomie, Prague University of Economics and Business, vol. 2022(1), pages 3-26.
    15. Blanco, Hector & Neri, Lorenzo, 2023. "Knocking It Down and Mixing It Up: The Impact of Public Housing Regenerations," IZA Discussion Papers 15855, Institute of Labor Economics (IZA).
    16. Gilbert, Catherine & Gurran, Nicole, 2021. "Can ceding planning controls for major projects support metropolitan housing supply and diversity? The case of Sydney, Australia," Land Use Policy, Elsevier, vol. 102(C).
    17. Lönnroth, Tea & Krigsholm, Pauliina & Falkenbach, Heidi & Oikarinen, Elias, 2024. "Advancing understanding of the linkages between local land policy interventions and the responsiveness of housing supply: Intervention mechanisms in the Finnish context," Land Use Policy, Elsevier, vol. 141(C).
    18. Alex Ramiller, 2022. "Displacement through development? Property turnover and eviction risk in Seattle," Urban Studies, Urban Studies Journal Limited, vol. 59(6), pages 1148-1166, May.
    19. Gwen Arnold & Meghan Klasic & Madline Schomburg & Abigail York & Melissa Baum & Maia Cherin & Sydney Cliff & Parisa Kavousi & Alexandria Tillett Miller & Diana Shajari & Yuer Wang & Luigi Zialcita, 2022. "Boom, bust, action! How communities can cope with boom‐bust cycles in unconventional oil and gas development," Review of Policy Research, Policy Studies Organization, vol. 39(5), pages 541-569, September.
    20. Mast, Evan, 2023. "JUE Insight: The effect of new market-rate housing construction on the low-income housing market," Journal of Urban Economics, Elsevier, vol. 133(C).
    21. Ryan Greenaway-McGrevy & Gail Pacheco & Kade Sorensen, 2021. "The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand," Urban Studies, Urban Studies Journal Limited, vol. 58(5), pages 959-976, April.
    22. Evan Mast, 2019. "The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market," Upjohn Working Papers 19-307, W.E. Upjohn Institute for Employment Research.
    23. Bradley Bereitschaft, 2023. "The changing ethno-racial profile of ‘very walkable’ urban neighbourhoods in the US (2010–2020): Are minorities under-represented?," Urban Studies, Urban Studies Journal Limited, vol. 60(4), pages 638-654, March.
    24. Peter Phibbs & Nicole Gurran, 2021. "The role and significance of planning in the determination of house prices in Australia: Recent policy debates," Environment and Planning A, , vol. 53(3), pages 457-479, May.
    25. Karen Chapple & Jae Sik Jeon, 2021. "Big Tech on the Block: Examining the Impact of Tech Campuses on Local Housing Markets in the San Francisco Bay Area," Economic Development Quarterly, , vol. 35(4), pages 351-369, November.

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