Nall et al. (2022)

The economics of Housing & Homelessness

A Class Presentation of

Spatial Collective Action Problem

Homeowners

  • Homeowners seek to protect home values and preserve neighborhood amenities

  • Given the local nature of housing development approval, homeowners are incentivized to mobile against local housing development, particularly high-density projects

Renters

  • Favor dense housing development more than homeowners

  • Don't mobilize in support of any one housing development because the benefits are diffuse

A Deeper Look at Restricted Development

  • People have "generalized preference for lower housing prices."

  • But locally, they are "sensitive to local externalities like noise and congestion"

  • One hypothesis is that more housing would be developed if the decision making was removed from the local level 

"Everyone has a little NIMBY in them. It doesn't have to be the part that wins"

- Jerusalem Demsas

Self-Reported Preferences

55-60%

85%

Self-Reported Preferences on Future Housing Prices

Does Increased Supply Lower Housing Prices?

Survey Results

  • People have a range of beliefs about the impact of a 10% increase in the Housing Supply on Prices
  • Compared to the beliefs about the Economics of Housing, peoples' beliefs about the impact of Free-Trade Agreements and the impact that supply-chain problems in new cars has on old cars aligns more closely with standard economic theory
  • Supply Skepticism is relatively uncorrelated with chain of move predictions

A 10% Increase in Housing Supply Would Lead to ...

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Housing

Non-Housing

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Supply Skepticism is relatively uncorrelated with Chain of Moves Predictions

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  • fostering the perception that macroeconomic factors and financial markets, rather than supply-side elements like building productivity or land-use restrictions, dominate housing prices

  • People observing new housing developments in high-price areas might mistake correlation for causation