Why Has House Price Dispersion Gone Up?

Stijn Van Nieuwerburgh and Pierre-Olivier Weill

The Review of Economic Studies, 2010, vol. 77, issue 4, 1567-1606

Abstract: We set up and solve a spatial, dynamic equilibrium model of the housing market based on two main assumptions: households with heterogenous abilities flow in and out metropolitan areas in response to local wage shocks, and the housing supply cannot adjust instantly because of regulatory constraints. In our equilibrium, house prices compensate for cross-sectional productivity differences. We increase productivity dispersion in the calibrated model in order to match the 30-year increase in cross-sectional wage dispersion that we document based on metropolitan-level data. We show that the model quantitatively matches the observed 30-year increase in dispersion of house prices across US metropolitan areas. It is consistent with several other features of the cross-sectional distribution of house prices and wages. Copyright , Wiley-Blackwell.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (181)

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1467-937X.2010.00611.x (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Why Has House Price Dispersion Gone Up? (2006)
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:oup:restud:v:77:y:2010:i:4:p:1567-1606

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().