Housing and Macroeconomics

Abstract

Until recently, the literature ignored the interactions between housing and macroeconomics. Thanks to many researchers' contributions, the macro-housing field is in development. This review complements previous research and highlights a few areas that have made significant progress lately. They are the rental market and related issues, housing affordability, people's beliefs and expectations, and the interactions between the aggregate and regional markets. Theoretical models have become increasingly realistic and hence can be solved only numerically. While the recent literature has provided essential policy lessons, it has yet delivered a "paradigm" for future research. There are also open questions that remain to be answered.

Keywords: Affordability, aggregate and regional shocks, belief and expectation, rental market, housing

JEL Classification: E10, E30, G50, R20, R30