The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Urban Housing Demand

  • Todd Sinai
Reference work entry


Urban housing demand is a reflection of households’ desire to live in cities. In this article, I discuss possible reasons why US households have exhibited an increasing taste for urban living, including employment, urban amenities, and consumption opportunities. Next, I explain how growing urban housing demand led to rising house prices and a sorting of households across cities by income. That dynamic generated a divergence across housing markets in the value of the tax subsidy to owner-occupied housing as well as housing market risk. Those factors, in turn, had a feedback effect on urban housing demand.


Housing markets Housing supply Housing tax subsidies Internet, economics of Monocentric city models Population growth Preference externalities Productivity growth Superstar cities Urban housing demand Willingness-to-pay 

JEL Classification

This is a preview of subscription content, log in to check access.


  1. Alonso, W. 1964. Location and land use. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  2. Flavin, M., and T. Yamashita. 2002. Owner-occupied housing and the composition of the household portfolio over the life cycle. American Economic Review 92: 345–362.CrossRefGoogle Scholar
  3. Glaeser, E., and J. Gyourko. 2005. Urban decline and durable housing. Journal of Political Economy 113: 345–375.CrossRefGoogle Scholar
  4. Glaeser, E., J. Kolko, and A. Sarz. 2001. Consumer city. Journal of Economic Geography 1: 27–50.CrossRefGoogle Scholar
  5. Gyourko, J., and T. Sinai. 2004. The (un)changing geographical distribution of housing tax benefits: 1980 to 2000. In Tax policy and the economy, vol. 18, ed. J. Poterba. Cambridge, MA: MIT Press.Google Scholar
  6. Gyourko, J., C. Mayer, and T. Sinai. 2006. Superstar cities, Working paper, vol. 12355. Cambridge, MA: NBER.CrossRefGoogle Scholar
  7. Mills, E. 1972. Studies in the structure of the urban economy. Baltimore: Johns Hopkins University Press.Google Scholar
  8. Muth, R. 1969. Cities and housing. Chicago: University of Chicago Press.Google Scholar
  9. Roback, J. 1982. Wages, rents, and the quality of life. Journal of Political Economy 90: 1257–1278.CrossRefGoogle Scholar
  10. Rosenthal, S.S., and W.C. Strange. 2003. Evidence on the nature and sources of agglomeration economies. In Handbook of urban and regional economics, ed. J.V. Henderson and J.-F. Thisse. Amsterdam: North-Holland.Google Scholar
  11. Sinai, T., and N. Souleles. 2005. Owner-occupied housing as a hedge against rent risk. Quarterly Journal of Economics 120: 763–789.Google Scholar
  12. Sinai, T., and J. Waldfogel. 2004. Geography and the Internet: Is the internet a substitute or complement for cities? Journal of Urban Economics 56: 1–24.CrossRefGoogle Scholar
  13. Waldfogel, J. 2003. Preference externalities: An empirical study of who benefits whom in differentiated product markets. RAND Journal of Economics 34: 557–568.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Todd Sinai
    • 1
  1. 1.