Real Estate in Transition: Housing, Welfare, and the Decarbonization of Cities
Abstract: Several U.S. cities have recently begun penalizing carbon emissions from large existing buildings, yet the full consequences of these policies remain poorly understood. I study the long-run incidence using a dynamic general equilibrium model of a closed city with an emissions externality, heterogeneous households and landlords, featuring forward-looking investment in abatement capital and discrete fuel switching. I calibrate the model to New York City by linking building-level emissions and rental cash flows to household microdata on income, wealth, and residential sorting, disciplined by the carbon tax structure of Local Law 97 (LL97), the first regulation to price building emissions. I find that the statute is paid for without being met. At the legislated penalty most covered buildings pay rather than comply, covered-stock emissions fall by 32.4 percent against the 76 percent cut the cap requires, rents rise, and the welfare loss falls hardest on the lowest-income renters. The welfare-maximizing penalty is $130 per ton, 51.5 percent below the legislated $268. Returning the penalties to households as a dividend turns the loss into a gain without sacrificing abatement.
Asset Reallocation Under Local Decarbonization Policy with Siqi Zheng
The Costs and Benefits of Stringency: How Building Codes Shape Housing Supply, Affordability, and Resilience with Jiyoung Lee and Siqi Zheng
Converting Brown Offices to Green Apartments with Arpit Gupta and Stijn Van Nieuwerburgh
Abstract: The conversion of brown office buildings to green apartments can contribute towards a solution to three pressing issues: oversupply of office in a hybrid-and-remote-work world, shortage of housing, and excessive greenhouse gas emissions. We propose a set of criteria to identify commercial office properties that are are physically suitable for conversion, yielding about 9% of all office buildings across the U.S. We present a pro-forma real estate model that identifies parameters under which these conversions are financially viable. We highlight several policy levers available to federal, state, and local governments that could accelerate the conversion, and that may be necessary should policymakers desire the creation of affordable housing. We highlight the role that the Inflation reduction Act could play.
The Hamilton Project (Policy version)
A Harmonized National Work-Type Classification of 150 Million U.S. Building Permit Records with Sean Hardesty Lewis, Yichun Fan, and Siqi Zheng
Abstract: Building permits are the most complete record of physical change to the U.S. built environment, but they cannot be compared across jurisdictions: local authorities classify work for administrative purposes, in vocabularies that differ by orders of magnitude in granularity and share no common definitions. The national statistic compiled from them, the Census Bureau’s Building Permits Survey, counts only newly authorized housing units, leaving demolition and all work on the existing stock unmeasured. PermitKey contributes at two levels. The first is a general procedure that treats jurisdiction-supplied labels as weak supervision, trains a multi-label classifier over permit descriptions against a taxonomy chosen by the analyst, and validates the result against both municipal labels and blind human review. The second is a national implementation: 150,044,555 records from 90 U.S. jurisdictions’ open data portals, classified into 25 work-type categories and released as permit counts for U.S. census tracts by year, together with the category definitions, validation tables and classification code, so that other researchers can apply the same procedure to taxonomies of their own.