Working Paper: NBER ID: w28675
Authors: Arpit Gupta; Vrinda Mittal; Jonas Peeters; Stijn van Nieuwerburgh
Abstract: We show that the COVID-19 pandemic brought house price and rent declines in city centers, and price and rent increases away from the center, thereby flattening the bid-rent curve in most U.S. metropolitan areas. Across MSAs, the flattening of the bid-rent curve is larger when working from home is more prevalent, housing markets are more regulated, and supply is less elastic. Housing markets predict that urban rent growth will exceed suburban rent growth for the foreseeable future.
Keywords: COVID-19; Urban Real Estate; Housing Market; Remote Work; Bid-Rent Curve
JEL Codes: G12; R12; R23; R51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 pandemic (H12) | decline in house prices and rents in city centers (R31) |
| COVID-19 pandemic (H12) | increase in prices and rents in suburban areas (R21) |
| flattening of the bid-rent curve (R31) | decline in house prices and rents in city centers (R31) |
| flattening of the bid-rent curve (R31) | increase in prices and rents in suburban areas (R21) |
| remote work capability (J62) | increase in suburban housing prices and rents (R21) |
| remote work capability (J62) | changes in housing demand (R21) |
| market expectations of urban rent growth (R21) | urban rent growth (R21) |