Some information on the relative valuations of residential and other private assets using Bureau of Economic Analysis fixed assets data
This paper presents information on the relative valuation of fixed assets, using data from the Bureau of Economic Analysis (BEA) coupled with observed longer-run historical relationships and “stylized facts” for macroeconomic relationships in the U.S. economy. Alternative scenarios are examined describing the likely extent of overvaluation of residential assets and the combination of real investment and price changes that would be required to resolve the overvaluation under varying assumptions. The scenarios presented illustrate how changes to the total nominal valuation of the asset stock typically are more easily accomplished through changes to the price of the asset than from changes in real investment flows, and this is particularly true for residential assets with their low depreciation rate. The approach provides a useful framework for the evaluation of alternative future paths and the scenarios presented provide useful benchmarks against which alternative combinations of changes in real investment and prices can be compared.
|Date of creation:||Feb 2008|
|Date of revision:|
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- Davis, Morris & Heathcote, Jonathan, 2005.
"The Price and Quantity of Residential Land in the United States,"
CEPR Discussion Papers
5333, C.E.P.R. Discussion Papers.
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- Morris A. Davis & Jonathan Heathcote, 2004. "The price and quantity of residential land in the United States," Finance and Economics Discussion Series 2004-37, Board of Governors of the Federal Reserve System (U.S.).
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- Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005.
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NBER Working Papers
11643, National Bureau of Economic Research, Inc.
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- Charles P. Himmelberg & Christopher J. Mayer & Todd Sinai, 2005. "Assessing high house prices: bubbles, fundamentals, and misperceptions," Staff Reports 218, Federal Reserve Bank of New York.
- Joshua H. Gallin, 2004. "The long-run relationship between house prices and rents," Finance and Economics Discussion Series 2004-50, Board of Governors of the Federal Reserve System (U.S.).
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