A1 Refereed original research article in a scientific journal
Revisiting metropolitan house price-income relationships
Authors: Oikarinen Elias, Bourassa Steven C., Hoesli Martin, Engblom Janne
Publisher: Elsevier (Commercial Publisher)
Publication year: 2023
Journal: Journal of Housing Economics
Journal name in source: JOURNAL OF HOUSING ECONOMICS
Journal acronym: J HOUS ECON
Article number: 101946
Volume: 61
Number of pages: 21
ISSN: 1051-1377
eISSN: 096-0791
DOI: https://doi.org/10.1016/j.jhe.2023.101946
Web address : https://doi.org/10.1016/j.jhe.2023.101946
Self-archived copy’s web address: https://research.utu.fi/converis/portal/detail/Publication/180475477
We explore long-term patterns of the house price-income relationship across the 70 largest U.S. metropolitan areas. In line with a standard spatial equilibrium model, our empirical findings indicate that regional house price-income ratios are typically not stable, even over the long run. In contrast, panel regression models that relate house prices to aggregate personal income and allow for regional heterogeneity yield stationary long-term relationships in most areas. The house price-income relationship varies significantly across locations, underscoring the importance of using estimation techniques that allow for spatial heterogeneity. The substantial regional differences are closely related to the elasticity of housing supply.
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