Housing Price Fundamentals through the Business Cycle

Michael Wenz and William Wei-Choun Yu
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William Wei-Choun Yu: University of California, Los Angeles, USA

European Journal of Business Science and Technology, 2016, vol. 2, issue 2, 91-106

Abstract: We examine the fundamental determinants of nominal home price growth from 1995 to 2012 across 300 metropolitan areas in the U.S. This sample period provides a trough-to-trough time period that allows for analysis through a complete business cycle. By using a supply-to-demand ratio for home price appreciation, we identify a straightforward and powerful method for predicting home price appreciation across markets. We suggest an alternative and simple method for addressing endogeneity in house prices and include a comprehensive measure of human capital. We find five significant factors: home supply growth, personal income growth, human capital, an ocean dummy, and geographic constraint.

Keywords: housing; real estate; house price forecasting (search for similar items in EconPapers)
JEL-codes: R2 R31 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:men:journl:v:2:y:2016:i:2:p:91-106

DOI: 10.11118/ejobsat.v2i2.55

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