House Prices and Rents in the 21st Century

Lara Loewenstein and Paul Willen

No 23-2, Working Papers from Federal Reserve Bank of Boston

Abstract: We study the joint evolution of prices and rents of residential property. After constructing rent and price indices for renter- and owner-occupied properties, we decompose the change in the price of occupant-owned property into (1) changes in rent, (2) changes in the relative prices of investor- and occupant-owned properties, and (3) changes in the price-rent ratio. Via a simple model, we link our decomposition to different sources of variation in house prices. We argue that while the 2000s boom was plausibly driven by exuberant expectations, the boom of the 2020s more likely resulted from a preference shock.

Keywords: housing bubbles; credit shocks; rent-price ratio; house price overvaluation (search for similar items in EconPapers)
JEL-codes: E30 E32 H31 R30 R31 (search for similar items in EconPapers)
Pages: 30
Date: 2023-02-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.bostonfed.org/publications/research-de ... -in-the-21st-century Summary (text/html)
https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2023/wp2302.pdf Full text (application/pdf)

Related works:
Working Paper: House Prices and Rents in the 21st Century (2023)
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:fip:fedbwp:95744

Ordering information: This working paper can be ordered from

DOI: 10.29412/res.wp.2023.02

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio ().