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Housing Investment and the U.S. Economy: How Have the Relationships Changed?

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  • William Miles

    (Wichita State University)

Abstract

Previous research has found that housing investment has a disproportionate role in the U.S. business cycle. This paper demonstrates that the relationship between housing and the rest of the economy has changed since financial deregulation and innovation in the early1980s. In particular, residential investment increases both consumption, as well as non-residential investment palpably more than in years past. Additionally, in the pre-deregulation years, non-residential investment appeared to crowd out housing activity. However, the results indicate that this effect is smaller in the present era than before the early 1980s, in all likelihood due to the switch from thrift-based financing of home mortgages to the current system in which secondary mortgage markets play a predominant role.

Suggested Citation

  • William Miles, 2009. "Housing Investment and the U.S. Economy: How Have the Relationships Changed?," Journal of Real Estate Research, American Real Estate Society, vol. 31(3), pages 329-350.
    • Handle: RePEc:jre:issued:v:31:n:3:2009:p:329-350
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    References listed on IDEAS

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    Cited by:

    1. Jarl G. Kallberg & Crocker H. Liu & Paolo Pasquariello, 2014. "On the Price Comovement of U.S. Residential Real Estate Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(1), pages 71-108, March.
    2. Tim Meyer, 2019. "On the Directional Accuracy of United States Housing Starts Forecasts: Evidence from Survey Data," The Journal of Real Estate Finance and Economics, Springer, vol. 58(3), pages 457-488, April.
    3. Christos S. Savva & Nektarios A. Michail, 2017. "Modelling house price volatility states in Cyprus with switching ARCH models," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 11(1), pages 69-82, June.
    4. Mahua Barari & Srikanta Kundu, 2019. "The Role of the Federal Reserve in the U.S. Housing Crisis: A VAR Analysis with Endogenous Structural Breaks," JRFM, MDPI, vol. 12(3), pages 1-20, July.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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