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Las Cruces housing price fluctuations

Steven L. Fullerton, James H. Holcomb and Thomas Fullerton

International Journal of Housing Markets and Analysis, 2020, vol. 14, issue 2, 272-282

Abstract: Purpose - This paper aims to analyze the median price for existing single-family housing units in Las Cruces, New Mexico. The proposed theoretical model accounts for the interplay between supply and demand sides of a metropolitan housing market. Design/methodology/approach - This study analyzes the median price for existing single-family housing units in Las Cruces, New Mexico. The proposed theoretical model accounts for the interplay between supply and demand sides of a metropolitan housing market. Explanatory variables used in the analysis are real per capita income, the housing stock, real mortgage rates, real apartment rents and the median real price of single-family units in the USA. Annual frequency data are collected for a 1971–2017 sample period. Parameter estimation is completed using two-stage generalized least squares. Empirical results confirm several, but not all, of the hypotheses associated with the underlying analytical model. In particular, Las Cruces housing prices are found to be reliably correlated with local income and national housing prices. Findings - Empirical results confirm several of the hypotheses associated with the underlying analytical model. In particular, Las Cruces housing prices are found to be reliably correlated with local income and national housing prices. Research limitations/implications - Results obtained support only a subset of the hypothetical relationships associated with the theoretical model. Additional testing for other small and/or medium sized is required to clarify whether these outcomes are unique to Las Cruces. Practical implications - Local income fluctuations and national housing price fluctuations appear to be reliably related to housing price fluctuations for this metropolitan economy. Originality/value - Comparatively little housing market research has been conducted for small and medium size urban economies. There is no guarantee that results obtained for large metropolitan housing markets are representative of smaller regional housing markets. The model developed has fairly moderate data requirements and may be applicable to other small and medium size economies such as Las Cruces.

Keywords: New Mexico; Applied econometrics; Housing economics; Las cruces; R15 Regional econometrics; R21 Housing demand; R31 Housing markets (search for similar items in EconPapers)
Date: 2020
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