Suburban Construction Case Study

Intent to examine sources of fluctuations in housing completions and inventory. The completion rate appears more or less constant, unaffected by changes in any of these variables, so that inventory is evidently control variable for builders. Consideration of Land development and urban growth. Starts are a function of changes of price in a housing market, rather than price. Lagged changes in short term interest rates has negative impact, construction costs not much significant while time to sale has large and significant impact. Establishes a linkage between decadal changes in suburban population and housing supply. More elastic suburban supply price elasticity. New supply a function of changes in input variables rather than levels of those

Deals with impact of external shocks on housing supply. Elasticity of housing supply with respect to price is low, even in long run. Coefficients of price and construction costs are opposite signs as expected, since both represent builder‟s profitability. Starts are highly sensitive to changes in interest rates. Supply defined as net investment in structures. Asset market approach, land not taken into consideration. Price of housing is major determinant of new supply. Price of output alternatives inversely proportional, construction cost unexpected sign and not statistically significant, persistent high inflation can cause sizable increase in stock of owner occupied housing. Do not take land as an input. There exists a divergence in short term and long term elasticity and hence, builder must take present as well as expected future price into consideration for making investment decision. Real interest rates and expected inflation have high impact on new supply. Price is directly proportional, real short term interest rate have significant negative relation, land costs not much important, no significant relation with construction costs, sales time month has high impact. Multi-family rental

Buildable criteria look at techniques, costs and its regulation compatibility. Landsite depends on presence of essential infrastructure services at site. Analysis of how different variables affect housing outcomes and supply. Macro level study. Monocentric city with competitive land market where new construction happens only at city boundary. Elasticity of supply defined as a function of city population size, density, discount rate, city‟s population growth, transportation costs and price of housing. Worked on determinants of housing supply elasticity. As per the model, regulations and density has desired effect but population growth rates and city size do not perform as predicted. Analysis points out geography (topography) as one of the most important determinants of housing supply elasticity both directly (by the way of amount of land available) and indirectly (by the way of increasing land values and higher incentive for antigrowth regulations). Redevelopment condition and land use allocations within the city is considered. Determinants of housing supply