Stuck at home: Housing demand during the COVID-19 pandemic

William Gamber, James Graham and Anirudh Yadav

Journal of Housing Economics, 2023, vol. 59, issue PB

Abstract: The COVID-19 pandemic induced an increase in both the amount of time that households spend at home and the share of expenditures allocated to at-home consumption. These changes coincided with a period of rapidly rising house prices. We interpret these facts as the result of stay-at-home shocks that increase demand for goods consumed at home as well as the homes that those goods are consumed in. We first test the hypothesis empirically using US cross-county panel data and instrumental variables regressions. We find that counties where households spent more time at home experienced faster increases in house prices. We then study various pandemic shocks using a heterogeneous agent model with general equilibrium in housing markets. Stay-at-home shocks explain around half of the increase in model house prices in 2020. Lower mortgage rates explain around one third of the price rise, while unemployment shocks and fiscal stimulus have relatively small effects on house prices. We find that young households and first-time home buyers account for much of the increase in housing demand during the pandemic, but they are largely crowded out of the housing market by the equilibrium rise in house prices.

Keywords: COVID-19; Pandemic; Stay at home; Housing; House prices; Consumption; Mortgage interest rates; Unemployment; Fiscal stimulus (search for similar items in EconPapers)
JEL-codes: E21 E32 E60 E62 E65 R21 R30 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Working Paper: Stuck at home: Housing demand during the COVID- 19 pandemic (2021)
Working Paper: Stuck at Home: Housing Demand During the COVID-19 Pandemic (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:59:y:2023:i:pb:s1051137722000808

DOI: 10.1016/j.jhe.2022.101908

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