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Real Estate and Rental Markets during Covid Times

Author

Listed:
  • Bertrand Achou

    (Retirement and Savings Institute HEC Montréal)

  • Hippolyte d'Albis

    (CNRS and Paris School of Economics)

  • Eleni Iliopulos

    (EPEE, University of Evry, Univ. Paris-Saclay and Cepremap.)

Abstract

In this work we introduce a general equilibrium model with landlords, indebted owner-occupiers and renters to study housing markets' dynamics. We estimate it by using standard Bayesian methods and match the US data of the last decades. This framework is particularly suited to explain current trends on housing markets. We highlight the crucial relationship between interest rates, house prices and rents, and argue that it helps understanding the main driving forces. Our analysis suggests that current developments on housing markets can play a role for a recovery from the Covid pandemic as they have an expansionary effect on aggregate output. Moreover, we account for the heterogeneous impact of crisis-induced policies depending on agents' status on the housing market. We show how, despite an increase in housing prices, the welfare of landlords has been negatively hit. This is associated to the joint decrease in returns on housing and financial assets that reduces their financial incomes.

Suggested Citation

  • Bertrand Achou & Hippolyte d'Albis & Eleni Iliopulos, 2021. "Real Estate and Rental Markets during Covid Times," Documents de recherche 21-02, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  • Handle: RePEc:eve:wpaper:21-02
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    References listed on IDEAS

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    More about this item

    Keywords

    Housing; Rental Markets; Collateral Constraints; Financial Frictions; HANK Models;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • G1 - Financial Economics - - General Financial Markets
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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