Government Regulation and Changes in the Affordable Housing StockCoauthor(s): C. Somerville. View Publication
In this paper, we look at the relationship between these two issues to examine how government regulation affects the dynamics of the low-income housing stock. We find that, consistent with theoretical models of housing, restrictions on the supply of new units lower the supply of affordable units. This occurs because increases in the demand for higher quality units raise the returns to maintenance, repairs, and renovations of lower quality units, as landlords have a stronger incentive to upgrade them to a higher quality, higher return housing submarket. This result is disturbing because it highlights how policies targeted toward new, higher income owner-occupied suburban housing can have unintended negative consequences for lower income renters.
Source: Economic Policy Review
Mayer, Christopher. "Government Regulation and Changes in the Affordable Housing Stock." Economic Policy Review 9, no. 2 (June 2003): 45-62.
Date: 6 2003