What Happens in Vegas Doesn't Always Stay in Vegas: The Dynamics of House Prices and Foreclosure Rates Across Space and Time
42 Pages Posted: 19 Jun 2020
Date Written: November 1, 2019
Abstract
This paper identifies instruments for house prices and foreclosure rates and estimates a Dynamic Spatial Simultaneous Equation System (DSSES) to investigate the dynamics of them across space and time. Shocks to the foreclosure rate in one state not only affect house prices in that state but also the foreclosure rates and house prices in nearby states. When it comes to the housing market, what happens in Vegas doesn’t always stay in Vegas. A one standard deviation foreclosure shock leads to a 2 percent decline in real house prices over the long run.
Keywords: Simultaneous Equation, Dynamic Panel, Spatial Spillover, House Price, Foreclosure
JEL Classification: C33, C36, R31
Suggested Citation: Suggested Citation