…we examine how housing supply has changed in the four largest metropolitan statistical areas (MSAs) in California and Texas. Despite differences in their topographies and regulatory environments, we find several common dynamics. As these MSAs grow, we see fewer net new units being built in the suburbs and a smaller proportion of new units being built as single-family detached homes. As a greater proportion of net new units are built in infill locations, more units are built using higher density – and more expensive – multifamily housing construction techniques. Interestingly, we see these housing supply patterns in both “pro-growth” MSAs and “highly regulated” MSAs. Among our entire sample of MSAs, we also see a declining share of census tracts that participate in accommodative growth. Our results are consistent with the existence of a convex housing supply curve. We believe this secular trend will pose real challenges to many urban housing policies aimed at improving affordability.
It’s from a recently published article by Anthony W. Orlando and Christian L. Redfearn. Via the excellent Kevin Lewis.
