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Secondary housing supply

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  • Mense, Andreas

Abstract

I estimate the impact of new housing supply on the local rent distribution, exploiting delays in housing completions caused by weather shocks during the construction phase. Increasing the flow of new supply by 1% lowers average rents by 0.2%, and increases disproportionately the number of second-hand units offered for rent. The supply shock affects the entire rent distribution. Employing a quantitative model, I explain this pattern by secondary supply: New supply triggers a cascade of moves that frees up units in all segments of the local market. The impact on rents is similarly strong in locations experiencing growing housing demand.

Suggested Citation

  • Mense, Andreas, 2023. "Secondary housing supply," LSE Research Online Documents on Economics 118645, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:118645
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    File URL: http://eprints.lse.ac.uk/118645/
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    More about this item

    Keywords

    housing supply; rental housing; rent distribution; secondary markets; market integration;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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