Changing Supply Elasticities and Regional Housing Booms

53 Pages Posted: 17 Jan 2020

See all articles by Knut Are Aastveit

Knut Are Aastveit

Norges Bank

Bruno Albuquerque

International Monetary Fund (IMF)

André K. Anundsen

Norges Bank; University of Oslo

Date Written: January 10, 2020

Abstract

Recent developments in US house prices mirror those of the 1996–2006 boom, but the recovery in construction activity has been weak. Using data for 254 US metropolitan areas, we show that housing supply elasticities have fallen markedly in recent years. Consistent with this, we find that monetary policy shocks have a stronger effect on house prices during the recent recovery than the previous boom. At the same time, building permits respond less. Finally, we find that housing supply elasticities have declined more in areas where land-use regulation has tightened the most, and in areas that experienced the sharpest housing busts.

Keywords: house prices, heterogeneity, housing supply elasticities, monetary policy

JEL Classification: C23, E32, E52, R31

Suggested Citation

Aastveit, Knut Are and Albuquerque, Bruno and Anundsen, Andre Kallak and Anundsen, Andre Kallak, Changing Supply Elasticities and Regional Housing Booms (January 10, 2020). Bank of England Working Paper No. 844, January 2020, Available at SSRN: https://ssrn.com/abstract=3520650 or http://dx.doi.org/10.2139/ssrn.3520650

Knut Are Aastveit

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107
Norway

Bruno Albuquerque (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://https://sites.google.com/view/brunoalbuquerque19

Andre Kallak Anundsen

University of Oslo ( email )

PO Box 6706 St Olavs plass
Oslo, 0130
Norway

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107
Norway

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