The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership

Daniel Fetter

No 19604, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The US home ownership rate rose by 10 percentage points between 1940 and 1945, about half the size of the net change over the 20th century, despite severe restrictions on construction during World War II. I present evidence that wartime rent control played an important role in this shift. The empirical test exploits features of the central authority's method of imposing rent control, which generated variation in the frozen level of rents for cities that had seen similar increases in rents prior to control. Greater rent reductions at the onset of rent control were associated with greater increases in home ownership over the first half of the 1940s. This relationship is not driven by differential trends in housing demand or other unobserved factors potentially correlated with variation in rent reductions. The results imply that if maximum rents had been set at their peak pre-control level rather than at a lower level, the increase in home ownership would have been 10 percent smaller. Combined with new data showing rapid house price appreciation during the war, this result suggests that 10 percent is a lower bound on the share of the "wartime" increase in home ownership that rent control can explain.

JEL-codes: N00 N42 N92 R00 R28 R31 R38 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-his and nep-ure
Note: DAE
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Citations: View citations in EconPapers (5)

Published as Fetter, Daniel K., 2016. "The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership," The Journal of Economic History, Cambridge University Press, vol. 76(04), pages 1001-1043, December.

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Journal Article: The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership (2016)
Working Paper: The Home Front: Rent control and the rapid wartime increase in home ownership (2013)
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