Local House Price Diffusion

34 Pages Posted: 18 Sep 2020

See all articles by Jeffrey Cohen

Jeffrey Cohen

University of Connecticut - School of Business

Jeffrey E. Zabel

Tufts University - Department of Economics

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Date Written: Autumn (Fall) 2020

Abstract

We contribute to the literature on house price diffusion by carrying out our analysis at three levels: CBSA (nationwide), town and census tract (Greater Boston Area). We estimate fixed‐effect models of house price growth on lagged growth (“Persistence”), nearby lagged growth (“Spillovers”) and Fundamentals growth. CBSA‐level Persistence and Spillover Effects are positive and significant. These large ripple/contagion effects likely contributed to the recent national‐level housing downturn. We find evidence of smaller town‐level Persistence and Spillover Effects. Hence, diffusion appears stronger across than within housing markets. Fundamentals and price expectations drive price diffusion, leaving room for bubbles from future price overoptimism.

Suggested Citation

Cohen, Jeffrey and Zabel, Jeffrey E., Local House Price Diffusion (Autumn (Fall) 2020). Real Estate Economics, Vol. 48, Issue 3, pp. 710-743, 2020, Available at SSRN: https://ssrn.com/abstract=3694524 or http://dx.doi.org/10.1111/1540-6229.12241

Jeffrey Cohen (Contact Author)

University of Connecticut - School of Business ( email )

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Storrs, CT 06269-2041
United States

Jeffrey E. Zabel

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-2318 (Phone)
617-627-3917 (Fax)

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