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Regional Migration and House Price Appreciation

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Author Info
David E. Frame () (Department of Real Estate Zicklin School of Business, Baruch College/CUNY, New York, NY 10010)
Abstract

Despite both empirical and anecdotal evidence suggesting the importance of common systematic factors determining price appreciation in residential real estate markets, the existing literature focuses almost exclusively on the impact of local variables. This paper presents a theoretical model of an urban housing market allowing for explicit consideration of the role of interregional migration in response to changes in economic opportunities within a system of cities. The model identifies the importance of aggregate income and aggregate population growth in house price appreciation and suggests that housing demand and population growth within regions are jointly determined. Empirical tests of these predictions provide strong support for the model. In particular, changes in per-capita aggregate income are negatively related to both returns to housing and local population growth and omitting this systematic component from empirical specifications leads to an underestimation of the impact of local income. Furthermore, there is significant evidence of endogeneity problems in empirical specifications of the model that are similar to those found in the existing literature.

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Publisher Info
Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 11 (2008)
Issue (Month): 1 ()
Pages: 96-112
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ire:issued:v:11:n:01:2008:p:96-112

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Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Related research
Keywords: Housing; interregional migration; metropolitan growth;

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Find related papers by JEL classification:
L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

References listed on IDEAS
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  1. G. Donald Jud & Dan T. Winkler, 2002. "The Dynamics of Metropolitan Housing Prices," Journal of Real Estate Research, American Real Estate Society, vol. 23(1/2), pages 29-46. [Downloadable!]
  2. Dennis R. Capozza & Patric H. Hendershott & Charlotte Mack, 2004. "An Anatomy of Price Dynamics in Illiquid Markets: Analysis and Evidence from Local Housing Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(1), pages 1-32, 03. [Downloadable!] (restricted)
  3. Joshua Gallin, 2006. "The Long-Run Relationship between House Prices and Income: Evidence from Local Housing Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 34(3), pages 417-438, 09. [Downloadable!] (restricted)
  4. Karl E. Case & Robert J. Shiller, 1989. "The Efficiency of the Market for Single-Family Homes," NBER Working Papers 2506, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Jonathan B. Berk, 1999. "A Simple Approach for Deciding When to Invest," American Economic Review, American Economic Association, vol. 89(5), pages 1319-1326, December. [Downloadable!] (restricted)
  6. Gabriel, Stuart A. & Shack-Marquez, Janice & Wascher, William L., 1993. "Does migration arbitrage regional labor market differentials?," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 211-233, April. [Downloadable!] (restricted)
  7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-1), pages 1-76. [Downloadable!]
  8. Capozza, Dennis R. & Helsley, Robert W., 1990. "The stochastic city," Journal of Urban Economics, Elsevier, vol. 28(2), pages 187-203, September. [Downloadable!] (restricted)
  9. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2005. "A Positive Theory Of Geographic Mobility And Social Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 263-303, 02. [Downloadable!] (restricted)
    Other versions:
  10. Capozza, Dennis R & Schwann, Gregory M, 1990. "The Value of Risk in Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 3(2), pages 117-40, June.
  11. Geraint Johnes & Thomas Hyclak, . "House Prices and Regional Labor Markets," Working Papers ec15/93, Department of Economics, University of Lancaster.
  12. Gyourko, Joseph & Voith, Richard, 1992. "Local market and national components in house price appreciation," Journal of Urban Economics, Elsevier, vol. 32(1), pages 52-69, July. [Downloadable!] (restricted)
    Other versions:
  13. Frame, David E., 2004. "Equilibrium and migration in dynamic models of housing markets," Journal of Urban Economics, Elsevier, vol. 55(1), pages 93-112, January. [Downloadable!] (restricted)
  14. Greenwood, Michael J. & Hunt, Gary L., 1989. "Jobs versus amenities in the analysis of metropolitan migration," Journal of Urban Economics, Elsevier, vol. 25(1), pages 1-16, January. [Downloadable!] (restricted)
  15. Stuart A. Gabriel & Joe P. Mattey & William L. Wascher, 1999. "House price differentials and dynamics: evidence from the Los Angeles and San Francisco metropolitan areas," Economic Review, Federal Reserve Bank of San Francisco, pages 3-22. [Downloadable!]
  16. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2006. "Superstar Cities," NBER Working Papers 12355, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Gabriel, Stuart A. & Shack-Marquez, Janice & Wascher, William L., 1992. "Regional house-price dispersion and interregional migration," Journal of Housing Economics, Elsevier, vol. 2(3), pages 235-256, September. [Downloadable!] (restricted)
    Other versions:
  18. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June. [Downloadable!] (restricted)
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