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Economic Fundamentals In Local Housing Markets: Evidence From U.S. Metropolitan Regions

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  • Min Hwang
  • John M. Quigley

Abstract

ABSTRACT This paper investigates the effects of national and regional economic conditions on outcomes in the single‐family housing market: housing prices, 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 also provide the first detailed evidence on the importance of vacancies in the owner‐occupied housing market on 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 exogenous 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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  • 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, August.
    • Handle: RePEc:bla:jregsc:v:46:y:2006:i:3:p:425-453
    DOI: 10.1111/j.1467-9787.2006.00480.x
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    1. Edward L. Glaeser & Joseph Gyourko & Raven Saks, 2003. "Why is Manhattan So Expensive? Regulation and the Rise in House Prices," Harvard Institute of Economic Research Working Papers 2020, Harvard - Institute of Economic Research.
    2. Patric H. Hendershott & Bryan D. MacGregor & Raymond Y.C. Tse, 2000. "Estimating the Rental Adjustment Process," NBER Working Papers 7912, National Bureau of Economic Research, Inc.
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