Real Estate and Rental Markets during Covid Times

Bertrand Achou (), Hippolyte d'Albis and Eleni Iliopulos
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Bertrand Achou: Retirement and Savings Institute HEC Montréal

No 21-02, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: In this work we introduce a general equilibrium model with landlords, indebted owner-occupiers and renters to study housing markets' dynamics. We estimate it by using standard Bayesian methods and match the US data of the last decades. This framework is particularly suited to explain current trends on housing markets. We highlight the crucial relationship between interest rates, house prices and rents, and argue that it helps understanding the main driving forces. Our analysis suggests that current developments on housing markets can play a role for a recovery from the Covid pandemic as they have an expansionary effect on aggregate output. Moreover, we account for the heterogeneous impact of crisis-induced policies depending on agents' status on the housing market. We show how, despite an increase in housing prices, the welfare of landlords has been negatively hit. This is associated to the joint decrease in returns on housing and financial assets that reduces their financial incomes.

Keywords: Housing; Rental Markets; Collateral Constraints; Financial Frictions; HANK Models (search for similar items in EconPapers)
JEL-codes: C1 E3 G1 I3 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-dge, nep-mac and nep-ure
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Related works:
Working Paper: Real Estate and Rental Markets during Covid Times (2021)
Working Paper: Real Estate and Rental Markets during Covid Times (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eve:wpaper:21-02

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