The house price-vacancy curve

Oliver Lerbs and Markus Teske

No 16-082, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Individual sales prices and local vacancy rates in the housing market pose a natural analogy to the wage curve, a popular concept in labor economics that describes how individual wages decrease with higher local unemployment. While housing search and matching models and housing externalities strongly suggest a stable inverse relationship, there is still a lack of convincing empirical research on the sensitivity of house sales to local vacancy variation. Based on more than 10,000 single-family home transactions from the German market, this paper confirms a robust house price-vacancy curve among individual home prices and adjacent residential vacancies. The economic size of the relationship is highly comparable across all four analyzed states: a doubling of the vacancy rate at the municipality level is associated with a 5-8% discount in quality-controlled selling prices. Despite negative price signals, local vacancy distributions tend to persist over long time horizons, leaving room for policy intervention.

Keywords: House prices; Housing vacancy; Hedonic regression; Wage curve (search for similar items in EconPapers)
JEL-codes: R23 R31 R58 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The House Price-Vacancy Curve (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:16082

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