Real Estate Economics

Veronika Püschel and Johannes Strobel

ERES from European Real Estate Society (ERES)

Abstract: Even after the end of the recent Great Recession period, U.S. housing prices and real estate loans continued to decline, while theuncertainty associated with the housing market remained elevated. This paper shows that an increase in uncertainty with respect to housing demand, i.e. a time-varying second moment of housing preferences, generates these dynamics and implies adverse effectsfor key macroeconomic aggregates such as output and consumption: An increase in housing preference volatility dampens housing prices which reduces the collateral value, borrowing activity and translates to a decrease in aggregate economic activity. Finally, wefind these results to be broadly in line with the data.

Keywords: Demand; housing market; time-varying uncertainty shocks (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2019_213

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