The Geography Channel of House Price Appreciation

Greg Howard and Jack Liebersohn
Additional contact information
Jack Liebersohn: Ohio State University (OSU) - Fisher College of Business

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: We develop a theory whereby increased demand for living in housing-supply-inelastic regions raises aggregate house prices, and we show that this channel contributed significantly to the U.S. house price boom from 2000 to 2006. As an example of our framework, we show that a decline in manufacturing, an industry concentrated in elastic areas, raises national house prices. Our framework also predicts that changes in the price-rent ratio, from interest rates or other changes in the mortgage market, increase relative locational demand for high-rent areas, which are typically inelastic. Changes in locational demand therefore fill in a missing link between changes in aggregate credit conditions and aggregate house prices. We show evidence of this in the data.

JEL-codes: E31 R23 R31 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-mac and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.ssrn.com/abstract=3236189

Related works:
Journal Article: Why is the rent so darn high? The role of growing demand to live in housing-supply-inelastic cities (2021)
Working Paper: The Geography Channel of House Price Appreciation: Did the Decline in Manufacturing Partially Cause the Housing Boom? (2018)
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:ecl:ohidic:2018-17

Access Statistics for this paper

More papers in Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().