The Impact of the COVID-19 Pandemic on the Demand for Density: Evidence from the U.S. Housing Market

Cities are shaped by the strength of agglomeration and dispersion forces. We show that the COVID-19 pandemic has re-introduced disease transmission as a dispersion force in modern cities. We use detailed housing data to study the impact of the COVID-19 pandemic on the location demand for housing. We find that the pandemic has led to a greater decline in the demand for housing in neighborhoods with high population density. We further show that the reduced demand for density is partially driven by the diminished need of living close to jobs that are telework-compatible and the declining value of access to consumption amenities. Neighborhoods with high pre-COVID-19 home prices also see a greater drop in housing demand. While the national housing market partially recovered in June, we show that the negative effect of the pandemic on the demand for density persists, indicating that the change in the demand for density may last beyond an aggregate recovery of housing demand.