This paper investigates the effects of housing price risk on housing choices over the life-cycle. Housing price risk can be substantial but, unlike other risky assets which people can avoid, the fact that most people will eventually own their home creates an insurance demand for housing assets early in life. Our contribution is to focus on the importance of home ownership and housing wealth as ...

We investigate whether expectations that are not fully rational have the potential to explain the evolution of house prices and the price-to-rent ratio in the United States. First, a stylized asset-pricing model solved under rational expectations is used to derive a fundamental value for house prices and the price-rent ratio. Although the model can explain the sample average of the price-rent r...

We construct a model of trade with matching frictions. The model provides a simple characterization for the joint proces of prices, sales and inventory. We compare the implications of the model to certain properties of housing markets. The model can generate the large price changes and the positive correlation between prices and sales that we see in the data. Unlike the data, prices are negativ...

Participants in the land market are usually hampered to browse and analyze the land price information due to the lack of information sources and available analysis tools. A service-oriented GIS-based web system was developed to provide a practical solution, its essential data sources contain basic geographic elements and benchmark land price (BLP)-related information. Core models for land price...

This dissertation investigates the impact of the current account on house price growth in the United States between Q4 1977 and Q4 2013. An econometric analysis is used to estimate the effect of changes in the current account balance on house price growth over the period, whilst accounting for a range of control variables. The regression results show that throughout the period, negative changes...

This paper establishes a theoretical and empirical link between the use of aggressive mortgage lending instruments, such as interest only, negative amortization or subprime, mortgages and the underlying house price volatility. Such instruments, which come into existence through innovation or financial deregulation, allow more borrowing than otherwise would occur. Within the context of a theoret...

We study the effects of homebuyers’ beliefs about future house price changes on their mortgage leverage choice. We show that, from a theoretical perspective, the relationship between homebuyers’ beliefs and their leverage choice is ambiguous, and depends on the magnitude of a “collateral adjustment friction” that reduces homebuyers’ willingness to adjust their house size in response to beliefs ...

A recent interest in Real Estate Market research is to investigate whether regional house prices converge in the long run. The argument is based on the idea that through migration and spatial arbitrage, shocks to the house price in one region could ̳ripple out‘ across the whole economy. If the hypothesis is accepted, relative price ratios across regions should show constancy. Although shortrun ...

There has been considerable debate in recent years regarding the role of behavioral factors in determining housing prices. The question of whether psychology matters in the housing market has been settled long ago: the answer is yes. Rather, economists are now debating in what ways psychology impacts market behavior and how large an effect this impact has on housing prices. One oft-cited exampl...

Large house price bubbles can be devastating for the real economy. Therefore, understanding the conditions under which large house price bubbles occur is fundamental. We shed new light on this issue in a laboratory setting. We find that endowing subjects with a lower preference for housing services creates larger experimental house price bubbles. This is in line with the theoretical model mecha...