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Real Estate Economics

Author

Listed:
  • Veronika Püschel
  • Johannes Strobel

Abstract

Even after the end of the recent Great Recession period, U.S. housing prices and real estate loans continued to decline, while theuncertainty associated with the housing market remained elevated. This paper shows that an increase in uncertainty with respect to housing demand, i.e. a time-varying second moment of housing preferences, generates these dynamics and implies adverse effectsfor key macroeconomic aggregates such as output and consumption: An increase in housing preference volatility dampens housing prices which reduces the collateral value, borrowing activity and translates to a decrease in aggregate economic activity. Finally, wefind these results to be broadly in line with the data.

Suggested Citation

  • Veronika Püschel & Johannes Strobel, 2019. "Real Estate Economics," ERES eres2019_213, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2019_213
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    More about this item

    Keywords

    Demand; housing market; time-varying uncertainty shocks;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

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