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Winners and Losers of House Price Booms and Busts

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  • Sánchez-Marcos, Virginia
  • Low, Hamish

Abstract

Fluctuations in house price generate substantial heterogeneity in the price of purchase of similar dwellings depending on the time of purchase. These differences in the price of purchase have large effects on life-time consumption and on income-net-of- housing-costs. We document these effects using the large house price fluctuations during the recent housing boom-bust in Spain. Households can mitigate these impacts through changing labor supply which we estimate using an IV strategy. Men work more in response to higher house prices, whereas the correlation of house prices and labor supply for women is driven by selection: households where women work more, buy more expensive houses.

Suggested Citation

  • Sánchez-Marcos, Virginia & Low, Hamish, 2022. "Winners and Losers of House Price Booms and Busts," CEPR Discussion Papers 17127, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17127
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    More about this item

    Keywords

    House price fluctuations; Labor supply; Mortgage costs;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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