Effects of Macroeconomic Uncertainty and Labor Demand Shocks on the Housing Market

Gabriel Lee, Binh Nguyen Thanh and Johannes Strobel

No 170, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper shows that macroeconomic uncertainty affects the housing market in two signi?ficant ways. First, uncertainty shocks adversely affect housing prices but not the quantities that are traded. Controlling for a broad set of variables in fi?xed-effects regressions, we ?find that uncertainty shocks reduce both housing prices and median sales prices in the amount of 1.4% and 1.8%, respectively, but the effect is not statistically signi?cant for the percentage changes of all homes sold. Second, when both uncertainty and local demand shocks are introduced, the effects of uncertainty on the housing market dominate that of local labor demand shocks on housing prices, median sell prices, the share of houses selling for loss, and transactions. The aforementioned effects are largest for the states that exhibit relatively high housing price volatilities, suggesting real options effects in the housing market during the times of high uncertainty.

Keywords: Bartik labor demand shocks; time-varying uncertainty shocks; real options effects; housing market (search for similar items in EconPapers)
JEL-codes: E2 E4 E5 R2 R3 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2017-06
New Economics Papers: this item is included in nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... e-Housing-Market.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: Effects of Macroeconomic Uncertainty and Labor Demand Shocks on the Housing Market (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:170_leenguyenthanhstrobel

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