Zusammenfassung
A number of countries have seen large booms in house prices over recent years. Some authors argue that these booms have also been driven by the desire of homevoters -- voters who are homeowners -- to restrict supply, or zone. Only, empirical studies inform us that homevoters' observed role in these booms is ambiguous at best. This paper explores potential reasons for why homevoters do not appear ...
Zusammenfassung
A number of countries have seen large booms in house prices over recent years. Some authors argue that these booms have also been driven by the desire of homevoters -- voters who are homeowners -- to restrict supply, or zone. Only, empirical studies inform us that homevoters' observed role in these booms is ambiguous at best. This paper explores potential reasons for why homevoters do not appear to visibly drive house prices in cross-sectional studies. The paper's model argues that (i) rent spillovers from one city to the next, (ii) zoning spillovers from one homevoter-ruled city to all other homevoter-ruled cities and even (iii) compensation payments from homevoter-ruled cities to their tenant-ruled neighbors (in exchange for extra zoning) all contribute to obscuring an existing homevoter-rent-nexus. -- The paper's model is motivated by evidence on Germany's large scale demolition, being one particularly striking instance of zoning.
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