IDEAS home Printed from https://ideas.repec.org/p/arz/wpaper/eres2017_173.html

Revisiting the House Price-Income Relationship

Author

Listed:
  • Elias Oikarinen
  • Steven Bourassa
  • Martin Hoesli
  • Janne Engblom

Abstract

We undertake a systematic analysis of the relationship between house prices and personal income using data for the 50 largest U.S. Metropolitan Statistical Areas (MSAs). We apply state-of-the-art panel data analysis tools, define income in multiple ways, allow for regional heterogeneity, and control for spatial dependence and endogeneity. We find that the house price-income ratio is not stable in the long run for most cities. In contrast, panel regression models that allow for regional heterogeneity and control for cross-sectional dependence yield stationary equations for MSA house prices. Among other findings, we show that relying on panel unit root tests is problematic. We also show that it is important to allow for heterogeneity across locations and to cater for endogeneity and cross-sectional dependence when analyzing the relationship between house prices and income.

Suggested Citation

  • Elias Oikarinen & Steven Bourassa & Martin Hoesli & Janne Engblom, 2017. "Revisiting the House Price-Income Relationship," ERES eres2017_173, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2017_173
    as

    Download full text from publisher

    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2017-173
    Download Restriction: no
    File URL: https://eres.architexturez.net/system/files/173.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arz:wpaper:eres2017_173. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Architexturez Imprints (email available below). General contact details of provider: https://edirc.repec.org/data/eressea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.