Working Paper: NBER ID: w21916
Authors: David Albouy; Mike Zabek
Abstract: Inequality in U.S. housing prices and rents both declined in the mid-20th century, even as home-ownership rates rose. Subsequently, housing-price inequality has risen to pre-War levels, while rent inequality has risen less. Combining both measures, we see inequality in housing consumption equivalents mirroring patterns in income across both space and time, according to an income elasticity of housing demand just below one. These patterns occur mainly within cities, and are not explained by observed changes in dwelling characteristics or locations. Instead, recent increases in housing inequality are driven most by changes in the relative value of locations, seen especially through land.
Keywords: Housing; Inequality; Consumption; Wealth
JEL Codes: D63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| homeownership rates (R21) | housing price inequality (R31) |
| land values (R52) | housing inequality (R21) |
| local housing inequality (R28) | local income inequality (D31) |
| housing inequality (R21) | rent inequality (R21) |