The Propagation of Demand Shocks Through Housing Markets

Elliot Anenberg and Daniel R. Ringo
Additional contact information
Elliot Anenberg: https://www.federalreserve.gov/econres/elliot-anenberg.htm
Daniel R. Ringo: https://www.federalreserve.gov/econres/daniel-r-ringo.htm

No 2019-084, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Housing demand stimulus produces a multiplier effect by freeing up owners attempting to sell their current home, allowing them to re-enter the market as buyers and triggering a chain of further transactions. Exploiting a shock to first-time home buyer demand caused by the 2015 surprise cut in Federal Housing Administration mortgage insurance premiums, we find that homeowners buy their next home sooner when the probability of their current home selling increases. This effect is especially pronounced in cold housing markets, in which homes take a long time to sell. We build and calibrate a model of the joint buyer-seller search decision that explains these findings as a result of homeowners avoiding the cost of owning two homes simultaneously. Simulations of the model demonstrate that stimulus to home buying generates a substantial multiplier effect, particularly in cold housing markets.

Keywords: Housing search; Housing stimulus; Multiplier effects; Joint buyer-seller (search for similar items in EconPapers)
Pages: 53 p.
Date: 2019-12-16
New Economics Papers: this item is included in nep-cmp, nep-gen and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.federalreserve.gov/econres/feds/files/2019084pap.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2019-84

DOI: 10.17016/FEDS.2019.084

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().