Economic Fundamentals in Local Housing Markets: Evidence from U.S. Metropolitan Regions

29 Pages Posted: 7 Jan 2007

See all articles by Min Hwang

Min Hwang

George Washington University - Department of Finance

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased); University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased)

Abstract

This paper investigates the effects of national and regional economic conditions on outcomes in the single-family housing market: housing prices, vacancies, and residential construction activity. Our three-equation model confirms the importance of changes in regional economic conditions, income, and employment on local housing markets. The results also provide the first detailed evidence on the importance of vacancies in the owner-occupied housing market on housing prices and supplier activities. The results also document the importance of variations in materials, labor and capital costs, and regulation in affecting new supply. Simulation exercises, using standard impulse response models, document the lags in market responses to exogenous shocks and the variations arising from differences in local parameters. The results also suggest the importance of local regulation in affecting the pattern of market responses to regional income shocks.

Suggested Citation

Hwang, Min and Quigley, John M., Economic Fundamentals in Local Housing Markets: Evidence from U.S. Metropolitan Regions. Journal of Regional Science, Vol. 46, No. 3, pp. 425-453, August 2006. Available at SSRN: https://ssrn.com/abstract=918612 or http://dx.doi.org/10.1111/j.1467-9787.2006.00480.x

Min Hwang (Contact Author)

George Washington University - Department of Finance ( email )

2023 G Street
Washington, DC 20052
United States

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased) ( email )

Berkeley, CA 94720-3880
United States
510-643-7411 (Phone)
510-643-7357 (Fax)

University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased) ( email )

Berkeley, CA 94720-1900
United States

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