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The house price-vacancy curve

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  • Lerbs, Oliver
  • Teske, Markus

Abstract

Individual sales prices and local vacancy rates in the housing market pose a natural analogy to the wage curve, a popular concept in labor economics that describes how individual wages decrease with higher local unemployment. While housing search and matching models and housing externalities strongly suggest a stable inverse relationship, there is still a lack of convincing empirical research on the sensitivity of house sales to local vacancy variation. Based on more than 10,000 single-family home transactions from the German market, this paper confirms a robust house price-vacancy curve among individual home prices and adjacent residential vacancies. The economic size of the relationship is highly comparable across all four analyzed states: a doubling of the vacancy rate at the municipality level is associated with a 5-8% discount in quality-controlled selling prices. Despite negative price signals, local vacancy distributions tend to persist over long time horizons, leaving room for policy intervention.

Suggested Citation

  • Lerbs, Oliver & Teske, Markus, 2016. "The house price-vacancy curve," ZEW Discussion Papers 16-082, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:16082
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. No Vacancy? Why Housing Prices in New York City are So High
      by Jason Barr in Skynomics Blog on 2020-01-14 13:41:46

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    Cited by:

    1. Oliver Lerbs & Jonas Neubacher & Markus Teske, 2017. "Wohnungsleerstand in Ostdeutschland: Begünstigende Faktoren, kleinräumige Trends und Auswirkungen auf Marktwerte," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 24(02), pages 12-20, April.
    2. Sören Gröbel, 2018. "Regional heterogeneity in age-related housing depreciation rates [Regionale Heterogenität altersbedingter Wertminderungen von Wohnimmobilien]," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 38(2), pages 219-254, October.

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    More about this item

    Keywords

    House prices; Housing vacancy; Hedonic regression; Wage curve;
    All these keywords.

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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