Clustered Housing Cycles

41 Pages Posted: 6 Oct 2015 Last revised: 30 Oct 2015

See all articles by Ruben Hernandez-Murillo

Ruben Hernandez-Murillo

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Michael Owyang

Federal Reserve Bank of St. Louis - Research Division

Margarita Rubio

University of Nottingham

Multiple version iconThere are 2 versions of this paper

Date Written: 2013

Abstract

Using a panel of U.S. city-level building permits data, we estimate a Markov-switching model of housing cycles that allows cities to systematically deviate from the national housing cycle. These deviations occur for clusters of cities that experience simultaneous housing contractions. We find that cities do not form housing regions in the traditional geographic sense. Instead, similarities in factors affecting the demand for housing (such as population growth or availability of credit) appear to be more important determinants of cyclical co-movements than similarities in factors affecting the supply for land (such as the availability of developable land or the elasticity of land supply).

Keywords: Business cycles, Housing, Economic indicators

JEL Classification: C11, C32, E32, R31

Suggested Citation

Hernandez-Murillo, Ruben and Owyang, Michael T. and Rubio, Margarita, Clustered Housing Cycles (2013). FRB St. Louis Working Paper No. 2013-21, Available at SSRN: https://ssrn.com/abstract=2669852

Ruben Hernandez-Murillo (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Michael T. Owyang

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
Saint Louis, MO 63011
United States

Margarita Rubio

University of Nottingham ( email )

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