American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
The Propagation of Demand Shocks through Housing Markets
American Economic Journal: Macroeconomics
(pp. 481–507)
Abstract
Housing demand stimulus produces a multiplier effect by freeing up owners attempting to sell their current home, allowing them to reenter the market as buyers. Exploiting a shock to first-time home buyer demand caused by a cut in mortgage insurance premiums, we find that homeowners buy their next home sooner when the probability of their current home selling increases. We build and calibrate a search model that explains these findings as a result of homeowners avoiding the cost of owning two homes simultaneously. Simulations demonstrate that stimulus to home buying generates a substantial multiplier effect, particularly in cold markets.Citation
Anenberg, Elliot, and Daniel Ringo. 2022. "The Propagation of Demand Shocks through Housing Markets." American Economic Journal: Macroeconomics 14 (3): 481–507. DOI: 10.1257/mac.20200037Additional Materials
JEL Classification
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets
- R38 Production Analysis and Firm Location: Government Policy