Economics at your fingertips  

Supply restrictions, subprime lending and regional US house prices

Andre Anundsen () and Christian Heebøll

Journal of Housing Economics, 2016, vol. 31, issue C, 54-72

Abstract: With regard to the recent US house price cycle, we analyze how the interaction between housing supply restrictions, mortgage credit constraints and a price-to-price feedback loop affects house price volatility. Considering 247 Metropolitan Statistical Areas, we estimate a simultaneous boom-bust system for house prices, housing supply and subprime lending. The model accounts for regional differences in supply elasticities that are determined by local variations in topographical and regulatory supply restrictions. Our results suggest that tighter supply restrictions lead to both a larger house price boom and bust, and that this is due to supply restricted areas being significantly more exposed to a financial accelerator effect and a price-to-price expectation mechanism. We further find that the presence of endogenous price acceleration mechanisms contribute to dilute the positive relationship between the total quantity response and the supply elasticity during a housing boom.

Keywords: Regional boom-bust cycles; Housing supply restrictions; Subprime lending; Financial accelerator (search for similar items in EconPapers)
JEL-codes: G21 R14 R21 R31 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Supply Restrictions, Subprime Lending and Regional US House Prices (2015) Downloads
Working Paper: Supply restrictions, subprime lending and regional US house prices (2014) Downloads
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:

Access Statistics for this article

Journal of Housing Economics is currently edited by H. O. Pollakowski

More articles in Journal of Housing Economics from Elsevier
Series data maintained by Dana Niculescu ().

Page updated 2017-12-08
Handle: RePEc:eee:jhouse:v:31:y:2016:i:c:p:54-72