Waiting for Affordable Housing in New York City

53 Pages Posted: 1 Jul 2019 Last revised: 31 Jan 2021

See all articles by Holger Sieg

Holger Sieg

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Chamna Yoon

Sungkyunkwan University

Date Written: June 2019

Abstract

We develop a new dynamic equilibrium model with heterogeneous households that captures the most important frictions that arise in housing rental markets and explains the political popularity of affordable housing policies. We estimate the model using data collected by the New York Housing Vacancy Survey in 2011. We find that there are significant adjustment costs in all markets as well as serious search frictions in the market for affordable housing. Moreover, there are large queuing frictions in the market for public housing. Having access to rent-stabilized housing increases household welfare by up to $65,000. Increasing the supply of affordable housing by ten percent significantly improves the welfare of all renters in the city. Progressive taxation of higher-income households that live in public housing can also be welfare improving.

Suggested Citation

Sieg, Holger and Yoon, Chamna, Waiting for Affordable Housing in New York City (June 2019). NBER Working Paper No. w26015, Available at SSRN: https://ssrn.com/abstract=3412689

Holger Sieg (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chamna Yoon

Sungkyunkwan University ( email )

53 Myeongnyun-dong 3-ga Jongno-ju
Guro-gu
Seoul, 110-745
Korea, Republic of (South Korea)

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