Location, Location, Location: Manufacturing and House Price Growth

Abstract

Manufacturing-heavy US regions recently saw lower employment and income growth. Exploiting data on tens of millions of housing transactions, we show that house prices grew by less in the same regions, a pattern exaggerated for the lowest-value homes. Counterfactual accounting exercises reveal that regional differences in the growth of the lowest-value homes more than fully account for a recent increase in overall house price inequality. Given the magnitude of housing in overall wealth, we conclude that differences in regional house price growth, especially the experience of manufacturing-heavy areas, should receive careful attention in studies of wealth inequality.

Keywords: manufacturing decline, house prices, wealth inequality