Crowdedness, Centralized Employment, and Multifamily Home Construction

Abstract

I identify several characteristics that account for a large share of the variation in multifamily construction across metropolitan areas during 2013-15. It was stronger in larger metros, as measured by population, and less crowded ones, as measured by median population density and the increase in density from the 50th percentile to the 95th percentile across tracts. It was also stronger in metros with larger spikes in density from the 95th to 99th percentile and in metros with a larger share of employment in the central business district. The positive correlation with spikes in population density appears to reflect nearby urban amenities, which attract residents from elsewhere in a metro. The positive correlation with the CBD employment share, which holds for multifamily construction in both the city and suburban portions of metros as well as for single-family construction in both portions, appears to reflect the agglomerative benefits of dense employment, which attract residents from other metros. Underlying data and replication code are posted.

Keywords: Home Construction, Centralized Employment, Urban Amenities

JEL Classification: R14, R31