A hybrid Tiebout model with vintage housing

This article examines how spatial variation in housing ages affects income segregation in US cities. We develop a dynamic general equilibrium hybrid Tiebout model with durable housing that combines local public finance and urban land use theories. Heterogeneous households sort across school districts based on their demand for local public goods and within districts based on the trade‐off between accessibility and housing rents. Housing is produced by perfectly competitive firms, and each new house lasts for two periods. We find that the age of the housing stock is an important variable that affects the spatial distribution of households, and hence segregation. The cyclic nature of our equilibrium allows us to explain suburbanization and regentrification processes as a result of the endogenously evolving age of the housing stock distribution.