Abstract
In this paper, I estimate a dynamic microeconometric model of housing supply. The model features forward-looking parcel owners who choose the optimal timing and nature of construction while taking into account expectations about future prices and costs. I estimate the model using a unique dataset on individual parcel owners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding both when and where construction occurs. Furthermore, pro-cyclical costs provide an incentive for some land-owners to build before price peaks, as waiting for higher prices involves also waiting for higher costs.
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