TY  - JOUR
AU  - Abraham,Jesse M.
AU  - Hendershott,Patric H.
TI  - Bubbles in Metropolitan Housing Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4774
PY  - 1994
Y2  - June 1994
UR  - http://www.nber.org/papers/w4774
L1  - http://www.nber.org/papers/w4774.pdf
N1  - Author contact info:
Patric H. Hendershott
Fisher Hall
Ohio State University
2100 Neil Avenue
Columbus, OH 43210
Tel: 218/963-1393
Fax: 218/963-9484
E-Mail: hendershott.2@osu.edu
AB  - A commonsense and empirically supported approach to explaining metropolitan real house price changes is for the theory to describe an equilibrium price level to which the market is constantly adjusting. The determinants of real house price appreciation, then, can be divided into two groups, one that explains changes in the equilibrium price and the other that accounts for the adjustment dynamics or changing deviations from the equilibrium price. The former group includes the growth in real income and real construction costs and changes in the real after-tax interest rate. The latter group consists of lagged real appreciation and the difference between the actual and equilibrium real house price levels. Either group of variables can explain a little over two-fifths of the variation in real house price movements in 30 cities over the 1977-92 period; together, they explain three-fifths.
ER  -