Divergence of House Prices in the United States: 2000 to 2015
44 Pages Posted: 1 Oct 2020
Date Written: August 16, 2020
Housing is the largest component of most American households’ wealth. Divergence of house prices directly affects wealth inequality. Using 5.9 million repeat sales of single-family houses, we find strong evidence that pricier houses had higher price appreciation rates from 2000 to 2015. Across houses, when the log house price increased by one standard deviation, the price appreciation rate increased by 70 to 100 basis points per annum. The superior performance of pricier houses was more pronounced in periods when the housing market performed poorly. We also use a variety of specifications to document detailed temporal variation and non-linearity of the relationship between houses’ price appreciation and their prices.
Keywords: house price, price appreciation, divergence
JEL Classification: G12, R33
Suggested Citation: Suggested Citation