IDEAS home Printed from https://ideas.repec.org/a/ire/issued/v11n012008p96-112.html
   My bibliography  Save this article

Regional Migration and House Price Appreciation

Author

Listed:
  • David E. Frame

    (Department of Real Estate Zicklin School of Business, Baruch College/CUNY, New York, NY 10010)

Abstract

Despite both empirical and anecdotal evidence suggesting the importance of common systematic factors determining price appreciation in residential real estate markets, the existing literature focuses almost exclusively on the impact of local variables. This paper presents a theoretical model of an urban housing market allowing for explicit consideration of the role of interregional migration in response to changes in economic opportunities within a system of cities. The model identifies the importance of aggregate income and aggregate population growth in house price appreciation and suggests that housing demand and population growth within regions are jointly determined. Empirical tests of these predictions provide strong support for the model. In particular, changes in per-capita aggregate income are negatively related to both returns to housing and local population growth and omitting this systematic component from empirical specifications leads to an underestimation of the impact of local income. Furthermore, there is significant evidence of endogeneity problems in empirical specifications of the model that are similar to those found in the existing literature.

Suggested Citation

  • David E. Frame, 2008. "Regional Migration and House Price Appreciation," International Real Estate Review, Global Social Science Institute, vol. 11(1), pages 96-112.
    • Handle: RePEc:ire:issued:v:11:n:01:2008:p:96-112
    as

    Download full text from publisher

    File URL: https://www.gssinst.org/irer/wp-content/uploads/2020/10/vol-11-no-1-regional-migration-and-house-price-appreciation.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dennis R. Capozza & Patric H. Hendershott & Charlotte Mack, 2004. "An Anatomy of Price Dynamics in Illiquid Markets: Analysis and Evidence from Local Housing Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(1), pages 1-32, March.
    2. Capozza, Dennis R. & Helsley, Robert W., 1990. "The stochastic city," Journal of Urban Economics, Elsevier, vol. 28(2), pages 187-203, September.
    3. Gabriel, Stuart A. & Shack-Marquez, Janice & Wascher, William L., 1992. "Regional house-price dispersion and interregional migration," Journal of Housing Economics, Elsevier, vol. 2(3), pages 235-256, September.
    4. Geraint Johnes & Thomas Hyclak, "undated". "House Prices and Regional Labor Markets," Working Papers ec15/93, Department of Economics, University of Lancaster.
    5. Gyourko, Joseph & Voith, Richard, 1992. "Local market and national components in house price appreciation," Journal of Urban Economics, Elsevier, vol. 32(1), pages 52-69, July.
    6. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2005. "A Positive Theory Of Geographic Mobility And Social Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 263-303, February.
    7. David Geltner, 1993. "Temporal Aggregation in Real Estate Return Indices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 21(2), pages 141-166, June.
    8. Case, Karl E & Shiller, Robert J, 1989. "The Efficiency of the Market for Single-Family Homes," American Economic Review, American Economic Association, vol. 79(1), pages 125-137, March.
    9. Greenwood, Michael J. & Hunt, Gary L., 1989. "Jobs versus amenities in the analysis of metropolitan migration," Journal of Urban Economics, Elsevier, vol. 25(1), pages 1-16, January.
    10. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2013. "Superstar Cities," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 167-199, November.
    11. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    12. G. Donald Jud & Dan T. Winkler, 2002. "The Dynamics of Metropolitan Housing Prices," Journal of Real Estate Research, American Real Estate Society, vol. 23(1/2), pages 29-46.
    13. Gabriel, Stuart A. & Shack-Marquez, Janice & Wascher, William L., 1993. "Does migration arbitrage regional labor market differentials?," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 211-233, April.
    14. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    15. Joshua Gallin, 2006. "The Long-Run Relationship between House Prices and Income: Evidence from Local Housing Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 34(3), pages 417-438, September.
    16. Stuart A. Gabriel & Joe P. Mattey & William L. Wascher, 1999. "House price differentials and dynamics: evidence from the Los Angeles and San Francisco metropolitan areas," Economic Review, Federal Reserve Bank of San Francisco, pages 3-22.
    17. Jonathan B. Berk, 1999. "A Simple Approach for Deciding When to Invest," American Economic Review, American Economic Association, vol. 89(5), pages 1319-1326, December.
    18. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 111-143, June.
    19. Frame, David E., 2004. "Equilibrium and migration in dynamic models of housing markets," Journal of Urban Economics, Elsevier, vol. 55(1), pages 93-112, January.
    20. Capozza, Dennis R & Schwann, Gregory M, 1990. "The Value of Risk in Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 3(2), pages 117-140, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jayaraman, Praveena & Gebremedhin, Tesfa G., 2013. "A Non-Spatial Analysis of the Role of Residential Real Estate Investment in the Economic Development of the Northeast Region of the United States," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143107, Southern Agricultural Economics Association.
    2. Jayaraman, Praveena & Lacombe, Donald J. & Gebremedhin, Tesfa, 2013. "A Spatial Analysis of the Role of Residential Real Estate Investment in the Economic Development of the Northeast Region of the United States," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150953, Agricultural and Applied Economics Association.
    3. Dean Hanink & Robert Cromley & Avraham Ebenstein, 2012. "Spatial Variation in the Determinants of House Prices and Apartment Rents in China," The Journal of Real Estate Finance and Economics, Springer, vol. 45(2), pages 347-363, August.
    4. Ping-Hung Chen & Chien-Wen Peng, 2024. "Determinants of Intra-District Residential Mobility – A Case Study of Taipei Metropolitan Area," International Real Estate Review, Global Social Science Institute, vol. 27(3), pages 329-359.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frame, David E., 2004. "Equilibrium and migration in dynamic models of housing markets," Journal of Urban Economics, Elsevier, vol. 55(1), pages 93-112, January.
    2. Raven E. Saks, 2005. "Job creation and housing construction: constraints on metropolitan area employment growth," Finance and Economics Discussion Series 2005-49, Board of Governors of the Federal Reserve System (U.S.).
    3. Jason Allen & Robert Amano & David P. Byrne & Allan W. Gregory, 2009. "Canadian city housing prices and urban market segmentation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1132-1149, August.
    4. Cragg, Michael & Kahn, Matthew, 1997. "New Estimates of Climate Demand: Evidence from Location Choice," Journal of Urban Economics, Elsevier, vol. 42(2), pages 261-284, September.
    5. Edward L. Glaeser & Joseph Gyourko, 2006. "Housing Dynamics," NBER Working Papers 12787, National Bureau of Economic Research, Inc.
    6. Andrew Figura, 2003. "The effect of restructuring on unemployment," Finance and Economics Discussion Series 2003-56, Board of Governors of the Federal Reserve System (U.S.).
    7. Goodman, Allen C. & Thibodeau, Thomas G., 2008. "Where are the speculative bubbles in US housing markets?," Journal of Housing Economics, Elsevier, vol. 17(2), pages 117-137, June.
    8. Tracey Seslen & William C. Wheaton & Henry O. Pollakowksi, 2005. "The Investment Performance of Housing and "Hedonic" Spatial Equilibrium," Working Paper 8583, USC Lusk Center for Real Estate.
    9. Sewin Chan, 1998. "Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?," Departmental Working Papers 199816, Rutgers University, Department of Economics.
    10. Joshua H. Gallin, 1999. "Net migration and state labor market dynamics," Finance and Economics Discussion Series 1999-16, Board of Governors of the Federal Reserve System (U.S.).
    11. Sasser, Alicia C., 2010. "Voting with their feet: Relative economic conditions and state migration patterns," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 122-135, May.
    12. Kuang Kuang Deng & Siu Kei Wong, 2023. "Revisiting the Autocorrelation of Real Estate Returns," The Journal of Real Estate Finance and Economics, Springer, vol. 67(2), pages 243-263, August.
    13. Gao, Andre & Lin, Zhenguo & Na, Carrie Fangzhou, 2009. "Housing market dynamics: Evidence of mean reversion and downward rigidity," Journal of Housing Economics, Elsevier, vol. 18(3), pages 256-266, September.
    14. Joshua Hojvat Gallin, 2004. "Net Migration and State Labor Market Dynamics," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 1-22, January.
    15. Alessandra Canepa & Emilio Zanetti Chini & Huthaifa Alqaralleh, 2022. "Global Cities and Local Challenges: Booms and Busts in the London Real Estate Market," The Journal of Real Estate Finance and Economics, Springer, vol. 64(1), pages 1-29, January.
    16. Elias Oikarinen & Janne Engblom, 2012. "Regional differences in housing price dynamics: panel data evidence," ERES eres2012_059, European Real Estate Society (ERES).
    17. Stefano Colonnello & Roberto Marfè & Qizhou Xiong, 2021. "Housing Yields," Working Papers 2021:21, Department of Economics, University of Venice "Ca' Foscari", revised 2021.
    18. Greenaway-McGrevy, Ryan & Hood, Kyle K., 2016. "Worker migration or job creation? Persistent shocks and regional recoveries," Journal of Urban Economics, Elsevier, vol. 96(C), pages 1-16.
    19. Alessandra Canepa & Emilio Zanetti Chini & Huthaifa Alqaralleh, 2020. "Global Cities and Local Housing Market Cycles," The Journal of Real Estate Finance and Economics, Springer, vol. 61(4), pages 671-697, November.
    20. Yuming Li & Laura Yue Liu, 2014. "Wealth, Labor Income and House Prices," International Real Estate Review, Asian Real Estate Society, vol. 17(3), pages 394-413.

    More about this item

    Keywords

    Housing; interregional migration; metropolitan growth;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ire:issued:v:11:n:01:2008:p:96-112. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IRER Graduate Assistant/Webmaster (email available below). General contact details of provider: https://www.gssinst.org/gssinst/index.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.