Working Papers

Bunching in Real-Estate Markets: Regulated Building Heights in New York City (with Jan Brueckner and Miguel Zerecero) Conditionally Accepted at Journal of Urban Economics

This paper presents a rare application in the real-estate context of the bunching methodology widely used in other areas of applied microeonomics. The application is building-height regulation in New York City, where several costly actions allow a developer to exceed the regulated height for his parcel. The paper aims to use the observed bunching pattern near a regulated height to estimate the marginal-cost penalty for exceeding that height, thus capturing the size of the cost-function kink faced by developers. Our approach reverses the usual application of the bunching methodology, under which the kink size (often the increment to a marginal tax rate) is known and the goal is to estimate a behavioral parameter (often a labor-supply elasticity). By contrast, our behavioral parameter (the exponent in a housing production function) has been reliably estimated, and we use its value to identify the unknown size of a cost-function kink. We also use our estimates to predict the increase in floor space in our sample that would result from eliminating height regulation

Is America’s Housing Affordability Problem a Housing Problem? (with Andra Ghent)

We document what fraction of the housing stock in US cities is affordable to different family types. Rather than looking at what fraction of their income people actually pay in rent in each city, we look at the extent to which the housing stock is affordable using discrete housing expenditure share cutoffs and the distribution of rents. We find that housing affordability is largely a problem for single-parent families and, to a lesser extent, single-person households. Several of the least affordable cities by our metrics are not glamour cities in the US Northeast, California, or South Florida but rather cities with both low incomes and low rents. Finally, we show how overcrowding in many high-cost cities leads to an understatement of the extent of affordability problems if affordability is measured using the actual share of income paid toward rent.

What’s The Use? Land Use Uncertainty, Real Estate Prices, and the Redevelopment Option Under Review at Regional Science & Urban Economics

We incorporate uncertainty surrounding future land-use restrictions to empirically assess the option value of redevelopment embedded in real estate prices for New York City (NYC) from 2003-2015. Using a two-stage estimation procedure, we interact predicted probabilities of land-use (re)zoning to either residential, commercial or manufacturing with an additional proxy for the property’s redevelopment propensity. Over the period spanning 2003 to 2015, estimates of the average option value to redevelop in Manhattan and Brooklyn are 20% and 8.5% of total estimated property value, respectively. There is also evidence that manufacturing lots identified as likely to be rezoned by the model sell at an average premium of 50% per square foot. Lastly, we find evidence consistent with the hypothesis that the redevelopment option value is counter-cyclical

Affordability in Purpose-Built Student Housing (with Jack Liebersohn and Jason Lee)
Draft Available Soon

From 2013-2020, real rent per bed for purpose-built student housing has increased by 24%, outpacing both income and tuition increases. We study the determinants of rents in the purpose-built student housing market, evaluating the relative roles of demand from enrollment increases and competition with the multifamily housing market. We find that purpose-built student housing and nearby student-competitive housing are highly integrated with local multifamily markets. As a result, the same factors increasing rents nationally have raised costs in the purpose-built student market.

Research in Progress

Macro Fundamentals & Commercial Real Estate Price Dynamics (with Jacob Sagi)

Landlord Concentration and Rent (with Jack Liebersohn)