Publication Date

12-19-2019

Series

Upjohn Institute working paper ; 19-316

DOI

10.17848/wp19-316

Abstract

We study the local effects of new market-rate housing in low-income areas using microdata on large apartment buildings, rents, and migration. New buildings decrease nearby rents by 5 to 7 percent relative to locations slightly farther away or developed later, and they increase in-migration from low-income areas. Results are driven by a large supply effect—we show that new buildings absorb many high-income households—that overwhelms any offsetting endogenous amenity effect. The latter may be small because most new buildings go into already-changing areas. Contrary to common concerns, new buildings slow local rent increases rather than initiate or accelerate them.

Issue Date

December 2019

Subject Areas

ECONOMIC DEVELOPMENT; Regional policy and planning; Urban issues

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Citation

Asquith, Brian J., Evan Mast, and Davin Reed. 2019. "Supply Shock Versus Demand Shock: The Local Effects of New Housing in Low-Income Areas." Upjohn Institute Working Paper 19-316. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp19-316