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  • 100% Does Gentrification Displace Poor Children? New Evidence from New York City Medicaid Data May 2019
    Kacie Dragan, Ingrid Ellen, Sherry A. Glied

    The pace of gentrification has accelerated in cities across the country since 2000, and many observers fear it is displacing low-income populations from their homes and communities. We offer new evidence about the consequences of gentrification on mobility, building and neighborhood conditions, using longitudinal New York City Medicaid records from January 2009 to December 2015 to track the movement of a cohort of low-income children over seven years, during a period of rapid gentrification in the city. We leverage building-level data to examine children in market rate housing separately from those in subsidized housing. We find no evidence that gentrification is associated with meaningful changes in mobility rates over the seven-year period. It is associated with slightly longer distance moves. As for changes in neighborhood conditions, we find that children who start out in a gentrifying area experience larger improvements in some aspects of their residential environment than their counterparts who start out in persistently low-socioeconomic status areas. This effect is driven by families who stay in neighborhoods as they gentrify; we observe few differences in the characteristics of destination neighborhoods among families who move, though we find modest evidence that children moving from gentrifying areas move to lower-quality buildings.

    ...gentrification measures; seminar participants at AREUEA national meetings, Eastern Economics Association meetings, Academy Health meetings, the Trachtenberg School at George Washington University, the Martin School at University of Kentucky, the NYU Wagner Policies for Action Research Meeting, Ed Glaeser, and Judith Ricks for comments on prior versions of this paper; and the Policies for Action...

    /papers/w25809

  • 99% Measuring Gentrification: Using Yelp Data to Quantify Neighborhood Change August 2018
    Edward L. Glaeser, Hyunjin Kim, Michael Luca

    We demonstrate that data from digital platforms such as Yelp have the potential to improve our understanding of gentrification, both by providing data in close to real time (i.e. nowcasting and forecasting) and by providing additional context about how the local economy is changing. Combining Yelp and Census data, we find that gentrification, as measured by changes in the educational, age, and racial composition within a ZIP code, is strongly associated with increases in the numbers of grocery stores, cafes, restaurants, and bars, with little evidence of crowd-out of other categories of businesses. We also find that changes in the local business landscape is a leading indicator of housing price changes, and that the entry of Starbucks (and coffee shops more generally) into a neighborhood predicts gentrification. Each additional Starbucks that enters a zip code is associated with a 0.5% increase in housing prices.

    ...GENTRIFICATION: USING YELP DATA TO QUANTIFY NEIGHBORHOOD CHANGE Edward L. Glaeser Hyunjin Kim Michael Luca Working Paper 24952 http://www.nber.org/papers/w24952 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2018 We thank Byron Perpetua for excellent research assistance. We thank Susan Athey, Shane Greenstein, and Luther Lowe for valuable feedback, and...

    /papers/w24952

  • 99% Gentrification and the Amenity Value of Crime Reductions: Evidence from Rent Deregulation October 2017
    David H. Autor, Christopher J. Palmer, Parag A. Pathak

    Gentrification involves large-scale neighborhood change whereby new residents and improved amenities increase property values. In this paper, we study whether and how much public safety improvements are capitalized by the housing market after an exogenous shock to the gentrification process. We use variation induced by the sudden end of rent control in Cambridge, Massachusetts in 1995 to examine within-Cambridge variation in reported crime across neighborhoods with different rent-control levels, abstracting from the prevailing city-wide decline in criminal activity. Using detailed location-specific incident-level criminal activity data assembled from Cambridge Police Department archives for the years 1992 through 2005, we find robust evidence that rent decontrol caused overall crime to fall by 16 percent—approximately 1,200 reported crimes annually—with the majority of the effect accruing through reduced property crime. By applying external estimates of criminal victimization’s economic costs, we calculate that the crime reduction due to rent deregulation generated approximately $10 million (in 2008 dollars) of annual direct benefit to potential victims. Capitalizing this benefit into property values, this crime reduction accounts for 15 percent of the contemporaneous growth in the Cambridge residential property values that is attributable to rent decontrol. Our findings establish that reductions in crime are an important part of gentrification and generate substantial economic value. They also show that standard cost-of-crime estimates are within the bounds imposed by the aggregate price appreciation due to rent decontrol.

    ...GENTRIFICATION AND THE AMENITY VALUE OF CRIME REDUCTIONS: EVIDENCE FROM RENT DEREGULATION David H. Autor Christopher J. Palmer Parag A. Pathak Working Paper 23914 http://www.nber.org/papers/w23914 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 October 2017 We thank seminar participants at NBER Summer Institute (Crime and Real Estate Sessions), Berkeley-Haas...

    /papers/w23914

  • 99% Who Gentrifies Low-Income Neighborhoods? May 2008
    Terra McKinnish, Randall Walsh, Kirk White

    This paper uses confidential Census data, specifically the 1990 and 2000 Census Long Form data, to study the demographic processes underlying the gentrification of low-income urban neighborhoods during the 1990's. In contrast to previous studies, the analysis is conducted at the more refined census-tract level with a narrower definition of gentrification and more closely matched comparison neighborhoods. The analysis is also richly disaggregated by demographic characteristic, uncovering differential patterns by race, education, age and family structure that would not have emerged in the more aggregate analysis in previous studies. The results provide no evidence of displacement of low-income non-white households in gentrifying neighborhoods. The bulk of the increase in average family income in gentrifying neighborhoods is attributed to black high school graduates and white college graduates. The disproportionate retention and income gains of the former and the disproportionate in-migration of the latter are distinguishing characteristics of gentrifying U.S. urban neighborhoods in the 1990's.

    ...gentrification has grown in communities across the country as housing rental and sales prices have soared .… there are numerous reports of resident displacement from neighborhoods long ignored that now attract higher-income households.”1 -2006 Urban Institute Report Over the past several decades, there has been substantial gentrification of low-income neighborhoods in many U.S. urban...

    /papers/w14036

  • 98% Endogenous Gentrification and Housing Price Dynamics July 2010
    Veronica Guerrieri, Daniel Hartley, Erik Hurst

    In this paper, we begin by documenting substantial variation in house price growth across neighborhoods within a city during city wide housing price booms. We then present a model which links house price movements across neighborhoods within a city and the gentrification of those neighborhoods in response to a city wide housing demand shock. A key ingredient in our model is a positive neighborhood externality: individuals like to live next to richer neighbors. This generates an equilibrium where households segregate based upon their income. In response to a city wide demand shock, higher income residents will choose to expand their housing by migrating into the poorer neighborhoods that directly abut the initial richer neighborhoods. The in-migration of the richer residents into these border neighborhoods will bid up prices in those neighborhoods causing the original poorer residents to migrate out. We refer to this process as "endogenous gentrification". Using a variety of data sets and using Bartik variation across cities to identify city level housing demand shocks, we find strong empirical support for the model's predictions.

    ...GENTRIFICATION AND HOUSING PRICE DYNAMICS Veronica Guerrieri Daniel Hartley Erik Hurst WORKING PAPER 16237 NBER WORKING PAPER SERIES ENDOGENOUS GENTRIFICATION AND HOUSING PRICE DYNAMICS Veronica Guerrieri Daniel Hartley Erik Hurst Working Paper 16237 http://www.nber.org/papers/w16237 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 July 2010 The authors...

    /papers/w16237

  • 98% Gentrification and the Rising Returns to Skill November 2015
    Lena Edlund, Cecilia Machado, Maria Micaela Sviatschi

    In 1980, housing prices in large US cities rose with distance from the city center. By 2010, that relationship had reversed. We propose that the inversion can be traced to more hours worked by the skilled. Scarce non-market time downgrades the importance of residential space and upgrades that of proximity to work, factors favoring the central-city location. Geo- coded census micro data covering the 27 largest US cities and the period 1980-2010 support our hypothesis: full-time skilled workers are more likely to locate in the city center and their growth can account for the observed price changes.

    ...GENTRIFICATION AND THE RISING RETURNS TO SKILL Lena Edlund Cecilia Machado Maria Micaela Sviatschi Working Paper 21729 http://www.nber.org/papers/w21729 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 November 2015 We have benefitted from discussions with Joe Altonji, V. V. Chari, David Deming, Jonathan Fisher, Jonathan Heathcote, Matthew Kahn, Shirley Liu...

    /papers/w21729

  • 98% Does Condominium Development Lead to Gentrification? August 2019
    Leah Platt Boustan, Robert A. Margo, Matthew M. Miller, James M. Reeves, Justin P. Steil

    The condominium structure, which facilitates ownership of units in multi-family buildings, was only introduced to the US during the 1960s. We ask whether the subsequent development of condominiums encouraged high-income households to move to central cities. Although we document a strong positive correlation between condominium density and resident income, this association is entirely driven by endogenous development of condos in areas otherwise attractive to high-income households. When we instrument for condo density using the passage of municipal regulations limiting condo conversions, we find little association between condo development and resident income, education or race.

    ...LEAD TO GENTRIFICATION? Leah Platt Boustan Robert A. Margo Matthew M. Miller James M. Reeves Justin P. Steil Working Paper 26170 http://www.nber.org/papers/w26170 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2019 We are grateful to the Ziman Center for Real Estate at UCLA for research support, and to seminar participants at Columbia University, George...

    /papers/w26170

  • 97% Income Growth and the Distributional Effects of Urban Spatial Sorting August 2019
    Victor Couture, Cecile Gaubert, Jessie Handbury, Erik Hurst

    We explore the impact of rising incomes at the top of the distribution on spatial sorting patterns within large U.S. cities. We develop and quantify a spatial model of a city with heterogeneous agents and non-homothetic preferences for neighborhoods with endogenous amenity quality. As the rich get richer, demand increases for the high quality amenities available in downtown neighborhoods. Rising demand drives up house prices and spurs the development of higher quality neighborhoods downtown. This gentrification of downtowns makes poor incumbents worse off, as they are either displaced to the suburbs or pay higher rents for amenities that they do not value as much. We quantify the corresponding impact on well-being inequality. Through the lens of the quantified model, the change in the income distribution between 1990 and 2014 led to neighborhood change and spatial resorting within urban areas that increased the welfare of richer households relative to that of poorer households, above and beyond rising nominal income inequality.

    ...house prices and spurs the development of higher quality neighborhoods downtown. This gentrification of downtowns makes poor incumbents worse off, as they are either displaced to the suburbs or pay higher rents for amenities that they do not value as much. We quantify the corresponding impact on well-being inequality. Through the lens of the quantified model, the change in the income distribution...

    /papers/w26142

  • 90% Urbanization and its Discontents March 2020
    Edward L. Glaeser

    American cities have experienced a remarkable renaissance over the past 40 years, but in recent years, cities have experienced considerable discontent. Anger about high housing prices and gentrification has led to protests. The urban wage premium appears to have disappeared for less skilled workers. The cities of the developing world are growing particularly rapidly, but in those places, the downsides of density are acute. In this essay, I review the causes of urban discontent and present a unified explanation for this unhappiness. Urban resurgence represents private sector success, and the public sector typically only catches up to urban change with a considerable lag. Moreover, as urban machines have been replaced by governments that are more accountable to empowered residents, urban governments do more to protect insiders and less to enable growth. The power of insiders can be seen in the regulatory limits on new construction and new businesses, the slow pace of school reform and the unwillingness to embrace congestion pricing.

    ...housing prices and gentrification has led to protests. The urban wage premium appears to have disappeared for less skilled workers. The cities of the developing world are growing particularly rapidly, but in those places, the downsides of density are acute. In this essay, I review the causes of urban discontent and present a unified explanation for this unhappiness. Urban resurgence represents...

    /papers/w26839

  • 88% Total Returns to Single Family Rentals December 2015
    Andrea Eisfeldt, Andrew Demers

    The market value of US Single Family Rental assets is $2.3 trillion, yet we believe that we provide the first systematic analysis of total returns to Single Family Rentals over a long time period, in a broad and granular cross section. Analogous to the dividend yields and capital gains that constitute total equity returns, total returns to single family rentals have two components: rental yields and house price appreciation. It is crucial to account for both total return inputs, both because they contribute approximately equally to returns at the national level, and because they are negatively correlated in the cross section of US cities. While the aggregate US Single Family Rental portfolio has historically benefitted equally from each of the two return components, high price tier cities accrued more capital gains, while low price tier cities had higher net rental yields. As a result, measures of returns that focus on either component individually will be systematically biased in the cross section. Within cities, we show that lower price tier zip codes have higher total returns as a result of both higher yields and higher house price appreciation.

    ...housing units in the US, and have a market value of approximately $2.3 trillion.1 Analogous to the dividend yields and capital gains that constitute total equity returns, total returns to single family rental assets have two components: rental yields and house price appreciation. There are many important studies of either housing returns from house price appreciation, or rent to price ratios in...

    /papers/w21804

  • 87% How Segregated is Urban Consumption? September 2017
    Donald R. Davis, Jonathan I. Dingel, Joan Monras, Eduardo Morales

    We provide measures of ethnic and racial segregation in urban consumption. Using Yelp reviews, we estimate how spatial and social frictions influence restaurant visits within New York City. Transit time plays a first-order role in consumption choices, so consumption segregation partly reflects residential segregation. Social frictions also have a large impact on restaurant choices: individuals are less likely to visit venues in neighborhoods demographically different from their own. While spatial and social frictions jointly produce significant levels of consumption segregation, we find that restaurant consumption in New York City is only about half as segregated as residences. Consumption segregation owes more to social than spatial frictions.

    ...in housing, jobs, and education. Even so, segregation in each of these domains remains a stubborn feature of modern America (Hellerstein and Neumark, 2008; Boustan, 2011). Many studies have documented these facts and examined their consequences for socioeconomic outcomes (Massey and Denton, 1993; Cutler and Glaeser, 1997; Chetty et al., 2014). Discrimination in consumption venues has also been...

    /papers/w23822

  • 86% Peer Effects in Water Conservation: Evidence from Consumer Migration July 2018
    Bryan Bollinger, Jesse Burkhardt, Kenneth Gillingham

    Social interactions are widely understood to influence consumer decisions in many choice settings. This paper identifies causal peer effects in water conservation during the growing season, utilizing variation from consumer migration. We use machine learning to classify high-resolution remote sensing images to provide evidence that conversion to dry landscaping underpins the peer effects in water consumption. We also provide evidence that without a price signal, peer effects are muted, demonstrating a complementarity between information transmission and prices. These results inform water use policy in many areas of the world threatened by recurring drought conditions.

    ...and housing transaction data from over 300,000 households in Phoenix, Arizona to identify households that make substantial and persistent reductions in growing season water consumption that are consistent with a switch to dry landscaping. We find that a 10% increase in the fraction of peer group households who substantially reduce their growing season water consumption from one year to the next...

    /papers/w24812

  • 82% Cities and the Environment September 2014
    Matthew E. Kahn, Randall Walsh

    This paper surveys recent literature examining the relationship between environmental amenities and urban growth. In this survey, we focus on the role of both exogenous attributes such as climate and coastal access as well as endogenous attributes such as local air pollution and green space. A city's greenness is a function of both its natural beauty and is an emergent property of the types of households and firms that locate within its borders and the types of local and national regulations enacted by voters. We explore four main issues related to sustainability and environmental quality in cities. First, we introduce a household locational choice model to highlight the role that environmental amenities play in shaping where households locate within a city. We then analyze how ongoing suburbanization affects the carbon footprint of cities. Third, we explore how the system of cities is affected by urban environmental amenity dynamics and we explore the causes of these dynamics. Fourth, we review the recent literature on the private costs and benefits of investing in "green" buildings. Throughout this survey, we pay careful attention to empirical research approaches and highlight what are open research questions. While much of the literature focuses on cities in the developed world, we anticipate that similar issues will be of increased interest in developing nation's cities.

    ...coastal housing, there will be other households with a taste for large new housing who are quite willing to live in an affordable city such as Las Vegas. At any point in time, a geographic area’s environmental attributes are a function of exogenous geography and determined by the (intended and unintended) choices made by the set of households, voters and industries that cluster within the city.

    /papers/w20503

  • 77% Comment on "Demystifying the Chinese Housing Boom" October 2015
    Martin Schneider
    in NBER Macroeconomics Annual 2015, Volume 30, Martin Eichenbaum and Jonathan A. Parker, editors

    ...Housing Boom" Chapter Author(s): Martin Schneider Chapter URL: http://www.nber.org/chapters/c13596 Chapter pages in book: (p. 167 – 175) Comment Martin Schneider, Stanford University and NBER Introduction What drives the spectacular recent movements in Chinese house prices is an important and challenging question. This paper makes progress by providing very interesting new data: it develops...

    /chapters/c13596

  • 77% Public School Quality Valuation Over the Business Cycle September 2016
    Stuart Gabriel, Owen Hearey, Matthew E. Kahn, Ryan K. Vaughn

    Over the years 2000 to 2013, the Los Angeles real estate market featured a boom, a bust, and then another boom. We use this variation to test how the hedonic valuation of school quality varies over the business cycle. Following Black (1999), we exploit a regression discontinuity design at elementary school attendance boundaries to test for how the implicit price of school quality changes. We find that the capitalization of school quality is counter-cyclical. While good schools always command a price premium, this premium grows during the bust. Possible mechanisms for these findings include consumers "trading down" from private to public schools during contractions as well as the effects of reduced household mobility during downturns in raising the value of the public school option.

    ...in Housing and Social Responsibility for generous funding. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER...

    /papers/w22668

  • 75% A Simple Model of Subprime Borrowers and Credit Growth January 2016
    Alejandro Justiniano, Giorgio E. Primiceri, Andrea Tambalotti

    The surge in credit and house prices that preceded the Great Recession was particularly pronounced in ZIP codes with a higher fraction of subprime borrowers (Mian and Sufi, 2009). We present a simple model with prime and subprime borrowers distributed across geographic locations, which can reproduce this stylized fact as a result of an expansion in the supply of credit. Due to their low income, subprime households are constrained in their ability to meet interest payments and hence sustain debt. As a result, when the supply of credit increases and interest rates fall, they take on disproportionately more debt than their prime counterparts, who are not subject to that constraint.

    ...house prices that preceded the Great Recession was particularly pronounced in ZIP codes with a higher fraction of subprime borrowers (Mian and Sufi, 2009). We present a simple model with prime and subprime borrowers distributed across geographic locations, which can reproduce this stylized fact as a result of an expansion in the supply of credit. Due to their low income, subprime households are...

    /papers/w21942

  • 70% Capitalization as a Two-Part Tariff: The Role of Zoning March 2019
    H. Spencer Banzhaf, Kyle Mangum

    This paper shows that the capitalization of local amenities is effectively priced into land via a two-part pricing formula: a “ticket” price paid regardless of the amount of housing service consumed and a “slope” price paid per unit of services. We first show theoretically how tickets arise as an extensive margin price when there are binding constraints on the number of households admitted to a neighborhood. We use a large national dataset of housing transactions, property characteristics, and neighborhood attributes to measure the extent to which local amenities are capitalized in ticket prices vis-a-vis slopes. We find that in most U.S. cities, the majority of neighborhood variation in pricing occurs via tickets, although the importance of tickets rises sharply in the stringency of land development regulations, as predicted by theory. We discuss implications of two-part pricing for efficiency and equity in neighborhood sorting equilibria and for empirical estimates of willingness to pay for non marketed amenities, which generally assume proportional pricing only.

    ...housing service consumed and a “slope” price paid per unit of services. We first show theoretically how tickets arise as an extensive margin price when there are binding constraints on the number of households admitted to a neighborhood. We use a large national dataset of housing transactions, property characteristics, and neighborhood attributes to measure the extent to which local amenities...

    /papers/w25699

  • 69% Segmented Housing Search January 2015
    Monika Piazzesi, Martin Schneider, Johannes Stroebel

    We study housing markets with multiple segments searched by heterogeneous clienteles. In the San Francisco Bay Area, search activity and inventory covary negatively across cities, but positively across market segments within cities. A quantitative search model shows how the endogenous flow of broad searchers to high-inventory segments within their search ranges induces a positive relationship between inventory and search activity across segments with a large common clientele. The prevalence of broad searchers also shapes the response of housing markets to localized supply and demand shocks. Broad searchers help spread such shocks across many segments and thereby reduce their effect on local market activity.

    ...HOUSING SEARCH Monika Piazzesi Martin Schneider Johannes Stroebel Working Paper 20823 http://www.nber.org/papers/w20823 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2015 We thank Ed Glaeser, Bob Hall, Giuseppe Moscarini, Robert Shimer, Vincent Sterk and Silvana Tenreyro for helpful comments. We also thank conference and seminar participants at the...

    /papers/w20823

  • 69% The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco January 2018
    Rebecca Diamond, Timothy McQuade, Franklin Qian

    We exploit quasi-experimental variation in assignment of rent control to study its impacts on tenants, landlords, and the overall rental market. Leveraging new data tracking individuals’ migration, we find rent control increased renters’ probabilities of staying at their addresses by nearly 20%. Landlords treated by rent control reduced rental housing supply by 15%, causing a 5.1% city-wide rent increase. Using a dynamic, neighborhood choice model, we find rent control offered large benefits to covered tenants. Welfare losses from decreased housing supply could be mitigated if insurance against rent increases were provided as government social insurance, instead of a regulated landlord mandate.

    ...rental housing supply by 15%, causing a 5.1% city-wide rent increase. Using a dynamic, neighborhood choice model, we find rent control offered large benefits to covered tenants. Welfare losses from decreased housing supply could be mitigated if insurance against rent increases were provided as government social insurance, instead of a regulated landlord mandate. Rebecca Diamond Graduate School of...

    /papers/w24181

  • 68% Dynamics of Housing Debt in the Recent Boom and Great Recession October 2017
    Manuel Adelino, Antoinette Schoar, Felipe Severino
    in NBER Macroeconomics Annual 2017, volume 32, Martin S. Eichenbaum and Jonathan Parker, editors

    ...housing boom and Great Recession. We show that the mortgage expansion was shared across the entire income distribution, i.e. the flow and stock of debt rose across all income groups (except for the top 5%). The mortgage expansion was especially pronounced in areas with increased house prices, and the speed at which houses turned over (churn) in these areas went up significantly. However, the...

    /chapters/c13919

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