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Cyclical and sectoral transitions in the U.S. housing market

  • Daniel Cooper
  • Rüdiger Bachmann

Using data from the Panel Study of Income Dynamics, this paper examines the flow of U.S. households within and between two distinct segments of the housing market — renter-occupied properties and owner-occupied properties. The paper provides relevant empirical moments for microfounded models of the housing sector. In particular, net flows in the housing market are substantially smaller than the gross flows, as is the case in the literature on labor market flows. Housing market turnover also exhibits substantial heterogeneity in household moving rates, the long-run moving trends, and the cyclical patterns of household moving decisions. Moves by renters tend to lead movements in real GDP, while moves by homeowners are procyclical and/or slightly lag the cycle. The paper further shows that the secular decline in household moves over time is driven by reduced within-sector moves. Taken together, the paper's results imply that models aiming to describe housing market flows will have to feature substantial nonlinearities and/or multiple sector-specific (owner versus renter) shocks.

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Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 12-17.

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Date of creation: 2012
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Handle: RePEc:fip:fedbwp:12-17
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  1. Uhlig, H.F.H.V.S. & Ravn, M., 1997. "On Adjusting the H-P Filter for the Frequency of Observations," Discussion Paper 1997-50, Tilburg University, Center for Economic Research.
  2. Antonia Díaz & Belén Jerez, 2013. "House Prices, Sales, And Time On The Market: A Search‐Theoretic Framework," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 837-872, 08.
  3. Greg Kaplan & Sam Schulhofer-Wohl, 2012. "Understanding the long-run decline in interstate migration," Working Papers 697, Federal Reserve Bank of Minneapolis.
  4. Michael W.L. Elsby & Bart Hobijn & Aysegul Sahin, 2011. "Unemployment Dynamics in the OECD," Tinbergen Institute Discussion Papers 11-159/3, Tinbergen Institute.
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