Central cities and housing supply: Growth and decline in US cities

Abstract

Many older American cities lost population during the last three decades of the twentieth century, but while cities such as Boston or New York saw numbers of dwelling units remain stable or even increase, others such as Buffalo, St. Louis, Cleveland, Detroit, and Pittsburgh lost large fractions of their dwelling units. This study decomposes decadal population changes from 1970 through 2000 for 351 US cities into household size, housing unit, and occupancy rate effects and finds substantial stock declines (as high as 50%) in many cities. It then develops a supply and demand model to model central city housing unit supply elasticities, with special emphasis on “kinked supply”—inelastic in the negative direction and elastic in the positive directions. Supply elasticities for housing unit decreases were between +0.03 and +0.13. For housing unit increases the elasticities were between +1.05 and +1.08.