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Regional Migration and House Price Appreciation

Author

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  • David E. Frame

    () (Department of Real Estate Zicklin School of Business, Baruch College/CUNY, New York, NY 10010)

Abstract

Despite both empirical and anecdotal evidence suggesting the importance of common systematic factors determining price appreciation in residential real estate markets, the existing literature focuses almost exclusively on the impact of local variables. This paper presents a theoretical model of an urban housing market allowing for explicit consideration of the role of interregional migration in response to changes in economic opportunities within a system of cities. The model identifies the importance of aggregate income and aggregate population growth in house price appreciation and suggests that housing demand and population growth within regions are jointly determined. Empirical tests of these predictions provide strong support for the model. In particular, changes in per-capita aggregate income are negatively related to both returns to housing and local population growth and omitting this systematic component from empirical specifications leads to an underestimation of the impact of local income. Furthermore, there is significant evidence of endogeneity problems in empirical specifications of the model that are similar to those found in the existing literature.

Suggested Citation

  • David E. Frame, 2008. "Regional Migration and House Price Appreciation," International Real Estate Review, Asian Real Estate Society, vol. 11(1), pages 96-112.
  • Handle: RePEc:ire:issued:v:11:n:01:2008:p:96-112
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    References listed on IDEAS

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    Cited by:

    1. Jayaraman, Praveena & Gebremedhin, Tesfa G., 2013. "A Non-Spatial Analysis of the Role of Residential Real Estate Investment in the Economic Development of the Northeast Region of the United States," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143107, Southern Agricultural Economics Association.
    2. Jayaraman, Praveena & Lacombe, Donald J. & Gebremedhin, Tesfa, 2013. "A Spatial Analysis of the Role of Residential Real Estate Investment in the Economic Development of the Northeast Region of the United States," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150953, Agricultural and Applied Economics Association.
    3. Dean Hanink & Robert Cromley & Avraham Ebenstein, 2012. "Spatial Variation in the Determinants of House Prices and Apartment Rents in China," The Journal of Real Estate Finance and Economics, Springer, vol. 45(2), pages 347-363, August.

    More about this item

    Keywords

    Housing; interregional migration; metropolitan growth;

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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