We develop a new dynamic equilibrium model with heterogeneous households that captures the most important frictions that arise in housing rental markets and explains the political popularity of affordable housing policies. We estimate the model using data collected by the New York Housing...

A standard real-options model predicts that time-to-build investment decisions could be delayed by uncertainty over future revenue. This paper examines the first-order importance of this mechanism by looking into the micro-data for residential construction during the recent housing boom and...