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Developing An Equilibrium Model For Assessing House Price Deviation

Author

Listed:
  • Dragomir Stefanov

    (UNWE)

  • Yana Stoencheva

    (UNWE)

  • Petar Ivanov

    (UNWE)

Abstract

This article deals with the problem of developing a reliable diagnostic tool that could help in reducing the unpredictability of house price cycles that cause undesirable reverberations in the economy. Such type of cycles is among the main drivers of price volatility and crises not only in the real estate sector itself but also for the financial system and the whole economy too. The purpose of this study is to introduce a step-by-step methodology for assessing the true deviations of house prices from their long-term equilibrium levels. Factors with a significant impact on house price dynamics are also determined. The result is a ready-to-use econometric model that detects possible formation of house price bubbles early enough, so that policymakers and regulators could take adequate actions against market overheating in due time.

Suggested Citation

  • Dragomir Stefanov & Yana Stoencheva & Petar Ivanov, 2025. "Developing An Equilibrium Model For Assessing House Price Deviation," Business Management, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 3 Year 20, pages 69-86.
    • Handle: RePEc:dat:bmngmt:y:2025:i:3:p:69-86
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    File URL: http://hdl.handle.net/10610/5209
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    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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