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  2. ASSA Annual Meeting
  3. 2021
  4. Preliminary Program
  5. Affordable Housing
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Affordable Housing

Paper Session

Sunday, Jan. 3, 2021 12:15 PM - 2:15 PM (EST)

Hosted By: American Real Estate and Urban Economics Association
  • Chair: Ingrid Ellen, New York University

Geographic and Temporal Variation in Housing Filtering Rates

Douglas McManus
,
Freddie Mac
Liyi Liyu
,
Freddie Mac
Elias Yannopoulos
,
Freddie Mac

Abstract

In the field of Housing Economics, filtering is the process by which properties, as they age, depreciate in quality and hence price and thus tend to be purchased by lower-income households. This is the primary mechanism by which competitive markets supply low-income housing. While at the national level filtering is an important long-term source of lower-income housing, this research shows that filtering rates for owner-occupied properties vary considerably both across and within metropolitan statistical areas (MSAs). Notably, in some markets, properties “filter up” to higher-income households. This paper contributes to our understanding of filtering by demonstrating the heterogeneity of filtering rates. The analysis finds strong geographic and temporal variation in filtering rates.

The Political Economy of Public Housing Upgrading Programs

Xiaoyu Zhang
,
National University of Singapore
Mi Diao
,
National University of Singapore
Tien Foo Sing
,
National University of Singapore

Abstract

The paper examines the differences in housing externalities across regions with different political affiliations. Using a merged dataset containing data on public housing upgrading, resale public housing transactions, electoral boundary and election results from 2010 to 2016 and a differences-in-discontinuity approach, we find evidence that the public housing programs are expedited in the ruling-party-held wards in periods leading up to the general elections, relative to contesting wards. We also find that the unbalanced provision of upgrading programs lead to higher housing externalities for blocks in the ruling-party-held ward than those for the otherwise similar blocks in the contesting wards. This paper provides new evidence on the expectation channel through which the housing externalities may be affected.

The Role of Informal Housing in Lowering China’s Urbanization Costs

Siqi Zheng
,
Massachusetts Institute of Technology
Dongxiao Niu
,
Massachusetts Institute of Technology
Weizeng Sun
,
Central University of Finance and Economics

Abstract

Over the past 30 years, China has experienced unprecedented economic growth spurred by large-scale rural-urban migration, industrialization, and strong global demand for its cheaply produced goods. This paper argues that an abundant supply of informal housing helped accommodate huge migrant inflows, and contain labor costs. By constructing a unique proxy of city-level informal housing supply elasticity, we examine the linkages between urban housing markets and labor markets (migration flows and wages), with a focus on the low-skilled migrants who are most likely to live in informal housing. We find greater migration inflows in cities with more elastic housing supplies, in both informal and formal sectors. We show that informal housing supply elasticity matters more for low-skilled migrants (those with a high school education or less), and that formal housing supply conditions matter more for high-skilled migrants (those who have a college degree or more education). Cities with greater elastic housing supplies have lower wage levels and faster economic growth. The findings provide a better understanding of the important role the informal housing sector has played in facilitating the low-cost urbanization and industrialization of China.

Estimating the Vulnerability of Households to Rent Increases

James D. Shilling
,
DePaul University
Jin Man Lee
,
DePaul University
Xin Janet Ge
,
University of Technology Sydney

Abstract

The question investigated in this paper is how vulnerable are US households today to the risk of rent increases. The short answer is that US households are, on average, more vulnerable to the risk of rent increases in 2018 than they were throughout the 1970s, 1980s, 1990s, and 2000s (and in heavily regulated markets even more vulnerable than they were in the 1940s and 1950s). To measure vulnerability requires a normative framework. We follow the approach developed by Sinai and Souleles (2005). We find that the rent premium that would leave households indifferent between the discounted cost of renting and its expected value is greater today, on average, than it was over the past fifty years (and in heavily regulated markets greater than it was over the past eighty years). There is therefore a clear public policy implication from this research.
Discussant(s)
Evan Mast
,
Upjohn Institute
Kris Gerardi
,
Federal Reserve Bank of Atlanta
Jenny Schuetz
,
Brookings Institution
Lara Loewenstein
,
Federal Reserve Bank of Cleveland
JEL Classifications
  • R0 - General