Simon C. Büchler

Publications

The amplifying effect of spatial planning restrictions on house prices and rents, Journal of Housing Economics (with Vera Götze, Lukas Hauck, Nicola Stalder)

This paper examines how spatial planning restrictions shape housing cost responses to demand shocks. Using a detailed micro-level dataset from Switzerland, we analyze the effects of land reserves, density limits, refusal rates, and overall regulatory constraints. Our dynamic model shows that stricter planning regulations significantly amplify housing cost growth, with stronger effects on house prices than rents. We validate these findings using a Bartik-style instrumental variable strategy. The paper contributes to the literature by jointly analyzing prices and rents and identifying amplification effects across distinct regulatory tools. While based on Swiss data, the underlying institutional features, local control, and strong demand are common elsewhere, making the findings broadly relevant.

Making Housing Affordable? The Local Effects of Relaxing Land Use Regulation, Journal of Urban Economics (with Elena Lutz)

This paper examines the effects of relaxing land-use regulations on housing supply and rents at the local intra-city level. We apply a staggered difference-in-difference model, exploiting exogenous differences in the treatment timing of zoning plan reforms as identifying variation. Increasing the allowable floor-to-area ratio (FAR), i.e., upzoning, significantly increases the living space and housing units by approximately 9% in the subsequent five to ten years. This effect is stronger for larger upzonings, for rasters where zoning is binding, and where rents are high. Furthermore, upzoning leads to no difference in hedonic rents between upzoned and later-upzoned rasters. These results show that upzoning is a viable policy for increasing housing affordability. However, the effects depend on the upzoning policy design and take several years to materialize.

Media coverage: A Swiss city cut red tape and ended up with many more homes. It's a model for the US.

The Past and Future of Non-Residential-to-Residential Conversions in New York City, Cities (with Ernesto Aldana and Lyndsey Rolheiser)

Concerns over rising office vacancy rates and falling office building property values in many urban areas have increased the pressure on cities and developers to consider converting underused office space to residential use. To aid in current and future conversations surrounding the feasibility of conversion, we look to the recent past. In doing so, we provide an account of conversion and redevelopment activity in New York City over the past decade to uncover associated structural and locational characteristics. We find that office-to-residential conversions contributed the greatest share of residential rental units of all non-residential conversions from 2010 to 2020, with nearly 5900 units created. However, there is suggestive evidence that more recent obsolete office buildings generate significantly fewer units as compared to office conversions of the 1990s. We additionally model the probability of conversion and redevelopment. We find that hotels have the highest conversion probability, followed by loft, retail, industrial, and office. In general, relatively taller, narrower, older buildings with diminished value are more likely to be converted. 

The Geography of Mortgage Interest Deductions, Journal of Urban Economics (with Yashar Blouri and Olivier Schöni)

We investigate the heterogeneous impact of the US federal mortgage interest deduction (MID) on households’ location and tenure decisions. We develop a spatial general-equilibrium model at the county level featuring an endogenous itemization of housing subsidies. We find that repealing the MID decreases homeownership rates more strongly in central areas because owner-occupiers migrate to the countryside. Welfare increases because positive externalities arising from less congested housing markets and undistorted tenure decisions outweigh productivity losses. A MID repeal is preferred to an increase of standard tax deductions as implemented in 2018 by the Tax Cuts and Jobs Act.

Quantifying Land-Use Regulation and its Determinants, Journal of Economic Geography (with Maximilian von Ehrlich)

Data: Survey responses and CLURI

We analyze land-use regulation and the determinants thereof across Swiss municipalities. We construct several residential development stringency indices based on a comprehensive survey. These indices capture various aspects of local regulation and land-use coordination across jurisdictions. Combining these indices, we construct an index that provides harmonized information about what local regulation entails and the local regulatory environment across municipalities. Our analysis shows that historical building density, natural amenities, socio-demographic factors, cultural aspects and municipal competition are important determinants of local land-use regulation. However, a large share of land-use regulation variation remains unexplained. Moreover, our results indicate that more stringent land-use regulation is associated with steeper house price increases but less urban sprawl.

The Impact of Human Capital and Housing Supply on Urban Growth, Urban Studies (with Dongxiao Niu, Anne Kinsella Thompson, and Siqi Zheng)

We empirically analyse the impact of human capital and housing supply on urban growth in the US and China. Integrating the heterogeneity of housing supply helps determine how a positive human capital shock translates into more population, higher house prices, or higher wages. To causally estimate this effect, we use a rich urban-level data set, choose our controls using the post-double-selection methodology, and instrument human capital with the per capita number of historical educational institutions. We find that human capital positively impacts urban population, house price and wage growth. While an elastic housing supply reinforces the impact on urban growth, it reduces house price growth and wage growth. Our results infer that human capital increases productivity in both countries and acts as an amenity only in the US.

The Amplifying Effect of Capitalization Rates on Housing Supply, Journal of Urban Economics. (with Maximilian von Ehrlich and Olivier Schöni)

Data: Housing supply elasticities

We provide empirical evidence that increases in housing rental income lead to a larger supply response than price increases of the same percentage value. We rationalize this differential in supply responsiveness with an amplification mechanism arising from a downward revision of capitalization rates following a rental income increase. We document that the amplification of the housing supply price elasticity is less pronounced in geographically constrained and tightly regulated neighborhoods and areas having more sophisticated investors. Our findings hold valuable lessons for public policies affecting the housing rental income, such as rent control and housing subsidies.

Working Papers

On the Value of Market Signals: Evidence from Commercial Real Estate Redevelopment (with Alex van de Minne and Olivier Schöni)

We investigate how institutional commercial real estate investors adapt their investment decisions according to tangible localized information signals provided by other peer investors. We find that investors are more likely to implement buy-to-redevelop strategies in a given area when recent investments signal the existence of a capital intensity gap and economic activity mismatch between older buildings and newly built ones. Our analysis shows that investors deem these information externalities valuable. Ceteris paribus, when real estate investments signal obsolescence of the existing stock, investors are willing to pay up to 30% more to acquire a property for redevelopment. Our findings contribute to the literature on the pricing of information signals by peers and provide insights for policymakers to stimulate commercial real estate investments and urban renewal. 

Reports

Study for the Federal Office of Housing (BWO) and the Cantonal planners of the Zurich metropolitan area - Ursachen für steigende Wohnkosten in der Schweiz mit Fokus auf die Raumplanung (with Maximilian von Ehrlich, Lukas Hauck, Joël Hofstetter, Donato Scognamiglio, and Nicola Stalder)

Study for the Swiss State Secretariat for Economic Affairs (SECO) - On the responsiveness of housing development to rent and price changes: Evidence from Switzerland (with Maximilian von Ehrlich and Olivier Schöni)

Other Publications

Wie reagiert das Wohnraumangebot auf Preisänderungen? Volkswirtschaft, Nr. 3/2008:58-60. (with Maximilian von Ehrlich and Olivier Schöni)