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Waiting for Affordable Housing in New York City

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  • Holger Sieg
  • Chamna Yoon

Abstract

We develop a new dynamic equilibrium model with heterogeneous households that captures the most important frictions that arise in housing rental markets and explains the political popularity of affordable housing policies. We estimate the model using data collected by the New York Housing Vacancy Survey in 2011. We find that there are significant adjustment costs in all markets as well as serious search frictions in the market for affordable housing. Moreover, there are large queuing frictions in the market for public housing. Having access to rent-stabilized housing increases household welfare by up to $65,000. Increasing the supply of affordable housing by ten percent significantly improves the welfare of all renters in the city. Progressive taxation of higher-income households that live in public housing can also be welfare improving.

Suggested Citation

  • Holger Sieg & Chamna Yoon, 2019. "Waiting for Affordable Housing in New York City," NBER Working Papers 26015, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26015
    Note: PE
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    References listed on IDEAS

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    1. Olsen, Edgar O. & Barton, David M., 1983. "The benefits and costs of public housing in New York City," Journal of Public Economics, Elsevier, vol. 20(3), pages 299-332, April.
    2. Dennis Epple & Luis Quintero & Holger Sieg, 2020. "A New Approach to Estimating Equilibrium Models for Metropolitan Housing Markets," Journal of Political Economy, University of Chicago Press, vol. 128(3), pages 948-983.
    3. Patrick Bayer & Robert McMillan & Alvin Murphy & Christopher Timmins, 2016. "A Dynamic Model of Demand for Houses and Neighborhoods," Econometrica, Econometric Society, vol. 84, pages 893-942, May.
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    More about this item

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • 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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