NYC’s tight housing market doing damage to the economy

Lack of inventory prevents workers from moving to places where they'd be most productive: study

TRD New York /
May.May 08, 2015 04:10 PM

The tight housing market in cities such as New York and San Francisco isn’t just inconvenient for its residents. It’s also a detriment to the entire U.S. economy, according to a new study.

Lack of inventory and a tight housing market is preventing workers from moving to places where they’d be most productive, a new study cited by Bloomberg found. Professor Enrico Moretti at the University of California at Berkeley and University of Chicago’s Professor Chang-Tai Hsieh looked at data for 220 cities t0 determine how much they added to the country’s national output growth between 1964 and 2009, Bloomberg News reported.

If land-use constraints in high-productivity cities such as New York are reduced, those cities could expand their labor forces, according to the website. This would give a 9.5 percent bump to the country’s gross domestic product.

“The places that are delivering the most output are unaffordable, and I think that is an issue,” Aaron Renn, a senior fellow at the Manhattan Institute for Policy Research, told the website.

While labor productivity and demand grew quickly in those cities, those towns weren’t the main growth engine, according to the new study. While the local economies grew by 19.3 percent over that time, the research found, those cities contributed 6.1 percent to aggregate growth.

“A limited number of American workers can have access to these very high-productivity cities,” Moretti told Bloomberg. [Bloomberg News] — Claire Moses


Related Articles

arrow_forward_ios
A homeowner in New York was about three times as likely to have a mortgage in forbearance, an analysis by Kroll found. Being self-employed doubles the likelihood. (iStock)

TRD Insights: NY, NJ homeowners more likely to be in mortgage forbearance

TRD Insights: NY, NJ homeowners more likely to be in mortgage forbearance
Mayor Bill de Blasio (Getty, iStock)

Developers fume over city plan to cut affordable housing spending

Developers fume over city plan to cut affordable housing spending
(Credit: iStock)

Six weeks, six jumps in mortgage applications to buy homes

Six weeks, six jumps in mortgage applications to buy homes
With home sellers also staying on the sidelines amid the public-health crisis, the market is now giving rise to bidding wars. (iStock)

The return of the bidding war

The return of the bidding war
(Credit: iStock)

Loan applications to buy homes rise for fifth week

Loan applications to buy homes rise for fifth week
Zillow CEO Rich Barton (Credit: Barton by Steve Jennings/Getty Images for TechCrunch; iStock)

Zillow relaunches iBuying program

Zillow relaunches iBuying program
Companies across the U.S. are warming up to the idea of remote working. Some employees who live in expensive regions like the San Francisco Bay Area, figure they might as well move someplace cheaper. (Credit: iStock)

The exodus: A rise in remote working could crater expensive housing markets

The exodus: A rise in remote working could crater expensive housing markets
The United States’ housing policy response to the coronavirus crisis has “significant gaps” that leave most renters vulnerable (Photo by Andrew Lichtenstein/Corbis via Getty Images)

TRD Insights: Most renters at risk despite aid

TRD Insights: Most renters at risk despite aid
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...