The Suburban Housing Market: Effects of City and Suburban Employment Growth

Using a data set of over 88,000 housing sales, we find that city employment growth has a significant positive effect on suburban house values; this effect is largest for housing closest to the central business district and declines with increasing distance from it. City employment growth has a negative effect on the rate of suburban house construction; the magnitude of the effect increases with distance. Suburban employment growth has little aggregate effect on house prices, and there is less variation by distance. Suburban growth has a significant effect on construction rates, especially at locations near the urban fringe.