Can't Get There from Here: Affordability Distance to a Superstar City

Abstract

This paper explores the housing affordability distance to a superstar city. Affordability distance is defined in terms of the increment to household income required to consume a quality- and consumption-adjusted housing unit in a proximate superstar city. The analysis focuses on Tel Aviv, Israel’s singular superstar city. Affordability distance to Tel Aviv rose by roughly 30 percent over the 2000 – 2015 period. Further, affordability distance was elevated among unmarried, non-college educated, and immigrant households. The upward movement in affordability distance was associated with increased out-migration from the city. Analysis of panel data suggests that policy interventions including investment in regional transportation infrastructure and new local housing supply were effective in mediating affordability distance.

Keywords: affordability distance, superstar city, housing development, transportation infrastructure

JEL Classification: R31, R29, R23, D63