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A Primer on U.S. Housing Markets and Housing Policy Introduction Many housing advocates, housing policymakers (wonks), and housing economists think that among themselves they know the answers to certain questions about housing in the United States. Examples of such questions include the following:
Unfortunately, the questions that advocates, wonks, and economists care about do not entirely overlap. When the questions do overlap, advocates give different answers from wonks, who give different answers from economists. The reasons often have do to with perspective: advocates are fighting what they (often correctly) perceive to be crises on the ground level, wonks are trying to intervene (or not intervene) in the market in the best manner possible, and economists are just trying to understand the market. Our purpose in this volume is therefore to review housing policy from a particular perspective—that of economists—but in doing so relate economic concepts in such a manner that they are useful to noneconomists, and to provide answers to questions such as those listed above.1 That is, we are attempting to give advocates and wonks a sense of how economists look at housing markets, and why that perspective is valuable. We also hope to help economists who are not housing specialists to understand housing a little better. Housing is not a homogenous good like wheat or oil, so that simple textbook models of demand and supply are only a starting point for analysis. We will do our best to give economists a sense of the institutional and social phenomena that often strongly influence housing markets. While we are economists, we appreciate that social and political phenomenon can lead to policy outcomes that do not efficiently allocate the supply of housing. This volume is an overview, and makes extensive use of both housing market and policy literatures. Still, this is not just a literature review, because it presents some specific empirical work to shed further light on several housing policy issues, including those listed above. Chapter 2 presents a broad review of the market for housing services in the United States. It includes an analysis of the following:
The third chapter contains a brief review of housing programs and policies, with an emphasis on a unified treatment of different interventions. The fourth chapter focuses on the current policy questions listed above, and the final chapter concludes with a brief review of current housing policies and programs evaluated in light of the facts we presented in the earlier chapters. This volume has already been used in urban and housing economics classes at the University of Wisconsin, the University of California, Berkeley, the University of Pennsylvania, the University of Florida, the University of Connecticut, and the George Washington University. These classes have comprised both undergraduate and master's level students in business, planning, and public policy. We hope that policymakers and advocates, as well as students and economists new to the study of housing, will find this book useful. NOTE 1. This is exactly what chapter 4 , "Six Questions for the Next Decade," attempts to do. Also note that more technical reviews of housing literature include Arnott (1987); Maclennan (1982); Muth and Goodman (1988); Olsen (1987); Rothenberg et al. (1991); and Smith, Rosen, and Fallis (1988). Less technical material can be found in, for example, DiPasquale and Keyes (1990), van Vliet (1998), Whitehead (1999), and several recent thematic issues of Housing Policy Debate. A Primer on U.S. Housing Markets and Housing Policy, by Richard K. Green and Stephen Malpezzi, is available in paperback from the Urban Institute Press (6" x 9", 226 pages, ISBN 0-87766-702-0, $26.50). Order online or call (202) 261-5687; toll-free 800.537.5487. |
