Housing supply elasticity: empirical evidence for Bogotá

Abstract

Despite the literature on urban economics has devoted a lot of attention to analyzing housing demand and its adjustment dynamics across markets, not a similar attention has been given to housing supply. In particular, there is limited knowledge on the way the supply curve would help to understand the urban equilibrium in highly dynamic markets as that of Bogota in Colombia. This article characterizes housing supply by stating the relationship between the value of housing and the price of urban land. We  estimate Bogota’s housing supply curve using information available for 2008. Results suggest that market adjustment after demand shocks occurs through quantities.