Trickle-Down Housing Economics

I evaluate the equilibrium effects of supplying high-quality housing on house prices and populations throughout a metro area. Between 2000 and 2019, metros that lack high-quality construction witness ``trickle-down'' growth in house prices throughout the quality distribution, gentrification in middle-quality housing, and homelessness. I fit an equilibrium model of the Los Angeles housing market to Census data and find a causal effect of high-quality construction on these outcomes. High-quality construction relieves house prices for the poor through equilibrium effects, but when it comes through reducing the low-quality housing stock, it can make the poor worse off.