A Spatial Look at Housing Boom and Bust Cycles
Chapter in NBER book Housing and the Financial Crisis (2013), Edward L. Glaeser and Todd Sinai, editors (p. 105 - 141)
This chapter investigates spatial variations in prices over the boom-bust cycle of housing markets both within and across urban areas. It considers the role of a new supply proxy--commuting time--in explaining the within-market and cross-market variation in how house price varies with stages of the market cycle. The within-market analysis used self-reported home values from the 2005 to 2010 American Community Survey samples to examine the changing relationship between housing price growth and commuting time. Consistent with the notion that buildings are easier to build at the city edge, the study finds that the price gradient became flatter in the bust, implying prices fell more in the center than at the city's edge. The analysis of housing price growth across markets shows that when prices increase overall, prices rise more in metropolitan statistical areas (MSAs) with greater average commuting time, even when controlling for regulatory and topological supply constraint proxies previously used in the literature.
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