This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively "time" the market, which reduces the elasticity of supply.
"A Dynamic Model of Housing Supply."
American Economic Journal: Economic Policy,
Model Construction and Estimation
Consumer Economics: Empirical Analysis
Business Fluctuations; Cycles
Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
Housing Supply and Markets