Consumption Commitments and Housing Dynamics

Preetesh Kantak ()
Additional contact information
Preetesh Kantak: Kelley School of Business, Indiana University, Bloomington, Indiana 47405

Management Science, 2025, vol. 71, issue 10, 8670-8697

Abstract: Using a measure of local long-run growth prospects, I uncover a novel link between economic fundamentals and house prices. Whereas excess housing returns are positively associated with economic growth prospects, housing valuations are negatively associated with shocks to growth prospects. I document an explanation in metro-area consumption: housing consumption is asymmetrically exposed to economic prospects in that it expands more quickly when prospects are strong than it contracts when prospects are poor. I explain these findings through the lens of an asset pricing model that focuses on a trade-off between nonseparable committed housing and nonhousing consumption.

Keywords: asset pricing; consumption commitments; long-run risk; real estate (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2022.01996 (application/pdf)

Related works:
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: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:10:p:8670-8697

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().