Download This PaperHousing Price Dynamics within the U.S.: Evidence from Zip Codes with Different Demographics
Macroeconomic Dynamics, Forthcoming
43 Pages Posted: 6 May 2020 Last revised: 16 Jul 2026
Date Written: September 16, 2024
Abstract
Using the Gordon growth model, this paper investigates monthly fluctuations in the U.S. housing market. The investigation is based on a vector autoregressive model with fixed coefficients that can explain the broad movements in housing volatility at the zip code level. The corresponding variance decomposition analysis further shows that the housing premium is the main driver of housing market fluctuations. Motivated by previous studies and using impulse response functions, it is also investigated how different components of the housing market respond over time to a shock in the interest rate in zip codes with different levels of income or demographics. The corresponding results reveal that the rent growth channel of monetary policy is effectively blocked in zip codes with lower income, higher female or minority populations, or lower education, while remaining functional in less vulnerable areas. These findings lead to important policy suggestions for targeted interventions.
Keywords: Housing Market, Gordon Growth Model, Monetary Policy
JEL Classification: R30, G12, C30, J11
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