The Geography Channel of House Price Appreciation: Did the Decline in Manufacturing Partially Cause the Housing Boom?

Greg Howard and Carl Liebersohn
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Carl Liebersohn: MIT

No 925, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: Locational preferences contributed substantially to the United States’ 2000-2006 housing boom. The increasing desirability of inelastic areas, much of which was due to manufacturing’s decline, caused 28 percent of the rise in housing prices. We document population movements towards inelastic areas and create a new local rent index that shows rents and house prices co-moved. We show theoretically why an increase in desirability of inelastic areas would raise prices nationally. Our model also explains the geographic consequences of a national price-rent ratio change. Finally, we quantify the geography channel by creating new elasticity measures of that cover the entire country.

Date: 2018
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Why is the rent so darn high? The role of growing demand to live in housing-supply-inelastic cities (2021)
Working Paper: The Geography Channel of House Price Appreciation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:925

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