Family house prices in the US: Convergence clubs by county (1975-2022)

This paper studies convergence in family house prices across 364 counties in the US from 1975 to 2022. We use the club convergence test to contrast the null hypothesis of full convergence, and if it is rejected, to identify endogenously convergence clubs that follow the same convergence pattern. We reject the hypothesis of absolute convergence and identify six different convergence clubs. We also explore some determinants that could explain the formation of clubs, and find that certain weather conditions, income level and education variables are correlated with the final subgroups identified by the club convergence test. Specifically, clubs with low family house price indexes are characterized by a lower income levels, a higher percentage of the population with college degrees, and a greater frequency of extreme weather conditions over the last two decades, such as extreme hot and cold days. In the current emergency context where these extreme weather conditions are becoming more frequent, and climate models continue to predict that their importance will continue increasing, these results are important to understand the impacts of climate change on family housing markets and adopt suitable mitigation policies.