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Spatial effects and house price dynamics in the USA

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  • Cohen, Jeffrey P.
  • Ioannides, Yannis M.
  • (Wirathip) Thanapisitikul, Win

Abstract

While an understanding of spatial spillovers and feedbacks in housing markets could provide valuable information for location decisions, little known research has examined this issue for the US Metropolitan Statistical Areas (MSAs). Also, it is unknown whether there can be differences in the spatial effects before and after a major housing “bust”. In this paper we examine spatial effects in house price dynamics. Using panel data from 363 US MSAs for 1996 to 2013, we find that there are significant spatial diffusion patterns in the growth rates of urban house prices. Lagged price changes of neighboring areas show greater effects after the 2007–08 housing crash than over the entire sample period of 1996–2013. In general, the findings are robust to controlling for potential endogeneity, and for various spatial weights specifications (including contiguity weights and migration flows). These results underscore the importance of considering spatial spillovers in MSA-level studies of housing price growth.

Suggested Citation

  • Cohen, Jeffrey P. & Ioannides, Yannis M. & (Wirathip) Thanapisitikul, Win, 2016. "Spatial effects and house price dynamics in the USA," Journal of Housing Economics, Elsevier, vol. 31(C), pages 1-13.
  • Handle: RePEc:eee:jhouse:v:31:y:2016:i:c:p:1-13
    DOI: 10.1016/j.jhe.2015.10.006
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    3. repec:ire:issued:v:22:n:01:2019:p:27-59 is not listed on IDEAS
    4. repec:gam:jsusta:v:9:y:2017:i:11:p:2050-:d:118040 is not listed on IDEAS

    More about this item

    Keywords

    Housing price dynamics; Spatial effects; Great Recession of 2007–2009; House price interactions across US MSAs; Geographical proximity effects; Migration flows;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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