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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 weather shocks during the construction phase as an instrument. New supply decreases rents at all quality levels. Building on a quantitative dynamic model of housing quality and tenure choice, I explain this pattern by secondary housing supply: New supply to the owner-occupier market triggers a cascade of moves in the rental market, freeing up units across the housing quality spectrum. This mechanism has implications for housing policy, the integration of the housing market, and the integration of new- and used-product markets in general.

Suggested Citation

  • Mense, Andreas, 2021. "Secondary housing supply," FAU Discussion Papers in Economics 05/2021, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    • Handle: RePEc:zbw:iwqwdp:052021
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    More about this item

    Keywords

    secondary markets; market integration; housing markets; rent distribution; dynamic housing choice;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • 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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