The Impact of the COVID-19 Pandemic on the Demand for Density: Evidence from the U.S. Housing Market
53 Pages Posted: 3 Aug 2020 Last revised: 14 Jan 2021
Date Written: January 10, 2021
Cities are shaped by the strength of agglomeration and dispersion forces. We show that the COVID-19 pandemic has re-introduced disease transmission as a dispersion force in modern cities. We use detailed housing data to study the impact of the COVID-19 pandemic on the location demand for housing. We find that the pandemic has led to a sudden shift of housing demand away from neighborhoods with high population density. The reduced demand for density is driven partially by the diminished need of living close to telework-compatible jobs and the declining value of access to consumption amenities. Neighborhoods with high pre-COVID-19 home value also see a greater drop in housing demand. While the national housing market recovered after the initial dip, we show that the pandemic's negative effect on the demand for density persisted and strengthened, indicating that the reduction in the demand for density has persisted beyond an aggregate recovery of housing demand.
Keywords: COVID-19, Pandemic, Density, City, Neighborhood, Housing, Location, Telework, Amenity
JEL Classification: R2, R3, I1
Suggested Citation: Suggested Citation