Past event
Brown Bag Seminar with Dr Luis Baldomero-Quintana, William and Mary College New Residential Investment and Gentrification
Luis conducts research primarily in the field of applied microeconomics, with a particular focus on International Trade, Economic Geography, and Urban Economics.
Abstract: We provide evidence that new residential construction can lead to gentrification. Between 2006 and 2008, developers in New York City rushed to claim expiring property tax incentives and built more housing. We instrument the number of new units built by the number of vacant parcels available before these incentives expired. Using novel building-level data, we find that existing buildings' rents increased by 1.8% in response to a 1% increase in rental stock within a 150-meter radius. We document that the new buildings generated new amenities, thus attracting high-income households in nearby blocks. These findings indicate that new construction can spur gentrification. Our results do not imply local governments should restrict the construction of new housing. Rather, we provide a potential explanation of why people living in working-class neighbourhoods oppose the construction of new buildings.