Essays on Housing and Demography

Abstract

This dissertation is an analysis of policy issues and historical patterns in housing markets and their connections to the demographic attributes of households. Chapter 1 studies Houston's significant reduction of the minimum lot size in 1999. Using synthetic control methods, I show Houston’s reduction of the MLS in 1999 led to a 12% decrease in the size of new housing and a 14% increase in the marginal cost of house size. To quantify the distributional welfare effects stemming from these incentives, I build a quantitative model with housing and demographics and show that the observed price changes induced by reductions of the MLS disproportionately help lower income and smaller households. Specifically, I find that the bottom decile of households (in terms of household size and income) gain about $25,000 more (in 2010 dollars) than the top decile from a reduction in the MLS. Finally, I show that the model's predicted locational selection of households by household size and income is consistent with empirical observations in Houston before and after the change in regulation. Chapter 2 studies the demographic determinants of housing regulations. I show that places in the United States which had larger fertility booms developed more housing regulations. Using WWII-induced variation in the size of the Baby Boom, I show that this relationship is plausibly causal and that the empirical patterns are consistent with political economy models of housing regulation that are modified to include fertility booms. Chapter 3 analyzes the distributional effect of new housing construction by tracing housing vacancy chains. I construct matched buyers/sellers chains, all matched with household specific characteristics reported from mortgage application data. I find that the interlink income elasticities on the chain are relatively low, but slightly higher than those estimated using census tract level data. The evidence is still consistent with the idea that new housing construction can have relatively immediate vacancy effects for lower socioeconomic status groups.