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Winners and Losers in House Markets

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Author Info

  • Nobuhiro Kiyotaki

    ()
    (Princeton University)

  • Alexander Michaelides

    ()
    (Central Bank of Cyprus and London School of Economics)

  • Kalin Nikolov

    ()
    (Bank of England and London School of Economics)

Abstract

This paper is a quantitatively-oriented theoretical study of the interaction between housing prices, aggregate production, and household behavior over a lifetime. We develop a life-cycle model of a production economy in which land and capital are used to build residential and commercial real estates. We find that, in an economy where the share of land in the value of real estates is large, housing prices react more to an exogenous change in expected productivity or the world interest rate, causing a large redistribution between net buyers and net sellers of houses. Changing financing constraints, however, has limited effects on housing prices.

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File URL: http://www.centralbank.gov.cy/media/pdf/NPWPE_No5_072010.pdf
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Bibliographic Info

Paper provided by Central Bank of Cyprus in its series Working Papers with number 2010-5.

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Length: 57 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:cyb:wpaper:2010-5

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Web page: http://www.centralbank.gov.cy/nqcontent.cfm?a_id=1
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Related research

Keywords: Real estates; land; housing prices; life cycle; collateral constraints;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Winners and Losers in House Markets
    by Christian Zimmermann in NEP-DGE blog on 2010-11-05 18:36:34
  2. US house prices have to fluctuate more than elsewhere
    by Economic Logician in Economic Logic on 2010-11-12 15:48:00
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