Economic Fundamentals in Local Housing Markets: Evidence from U.S. Metropolitan Regions
AbstractThis paper investigates the effects of national and regional economic conditions on housing market outcomes: the prices of owner-occupied housing, vacancies, and residential construction activity. Our three-equation model confirms the importance of changes in regional economic conditions, income and employment on local housing markets. The results provide the first detailed evidence on the importance of vacancies in the owner-occupied housing market in affecting housing prices and supplier activities. The results also document the importance of variations in materials, labor and capital costs and regulation in affecting new supply. Simulation exercises, using standard impulse response models, document the lags in market responses to endogenous shocks and the variations arising from differences in local parameters. The results also suggest the importance of local regulation in affecting the pattern of market responses to regional income shocks.
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Bibliographic InfoPaper provided by Berkeley Program on Housing and Urban Policy in its series Berkeley Program on Housing and Urban Policy, Working Paper Series with number qt79d325cm.
Date of creation: 06 Nov 2006
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Other versions of this item:
- Min Hwang & John M. Quigley, 2006. "Economic Fundamentals In Local Housing Markets: Evidence From U.S. Metropolitan Regions," Journal of Regional Science, Wiley Blackwell, vol. 46(3), pages 425-453.
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- DiPasquale Denise & Wheaton William C., 1994. "Housing Market Dynamics and the Future of Housing Prices," Journal of Urban Economics, Elsevier, vol. 35(1), pages 1-27, January.
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