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Quantifying the housing recovery: which MSAs are experiencing bubbles?

Author

Listed:
  • Azhar Iqbal

    (Wells Fargo Securities)

  • Mark Vitner

    (Wells Fargo Securities)

Abstract

The housing market is one of the most cyclical parts of the U.S. economy and played a leading role in the Great Recession. While house prices have recovered, the extent of the recovery varies considerably across markets. We evaluate housing prices in 20 MSAs and find that 12 out of them show a consistent pattern of behavior relative to the nation, while eight cities’ house price indices (HPIs) are characterized as having inconsistent behavior. Our analysis found breaks in the time series behavior of all HPIs. Furthermore, some MSAs, such as New York and Miami, began to recover much sooner than others. Granger causality test results suggest that some MSAs lead the national average and most of the other MSAs. Thus, our study suggests that changes in housing prices in a number of MSAs would provide an early warning for price moves at the national and regional levels.

Suggested Citation

  • Azhar Iqbal & Mark Vitner, 2017. "Quantifying the housing recovery: which MSAs are experiencing bubbles?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 52(4), pages 250-259, October.
    • Handle: RePEc:pal:buseco:v:52:y:2017:i:4:d:10.1057_s11369-017-0052-2
    DOI: 10.1057/s11369-017-0052-2
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    References listed on IDEAS

    as
    1. Azhar Iqbal & Mark Vitner, 2013. "Did Monetary Policy Fuel the Housing Bubble?," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 29(Fall 2013), pages 1-24.
    2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
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