Housing Supply, Land Costs and Price Adjustment

Grimes, Arthur; Aitken, Andrew

doi:10.1111/j.1540-6229.2010.00269.x

“…(iii) Housing markets with a less elastic supply, due to structural and/or institutional constraints, tend to display longer and more pronounced bubbles (Glaeser et al 2005, Gyourko 2009, Grimes and Aitken 2010, Paciorek 2013). …”

Section: Introductionmentioning

confidence: 99%

Heterogeneous Expectations, Boom-Bust Housing Cycles, and Supply Conditions: A Nonlinear Dynamics Approach

Dieci

¹

,

Westerhoff

²

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe combine a standard stock-flow housing market model, incorporating explicit relationships between house prices, the housing stock, and the rent level, with a parsimonious expectation formation scheme of housing market investors, reflecting an evolving mix of extrapolative and regressive expectation rules. The model results in a two-dimensional discrete-time nonlinear dynamical system. Based on realistic parameters, the model is able to generate endogenous boom-bust housing market dynamics with lasting periods of overvaluation and overbuilding. We thus exploit our model to investigate how real forces, in particular supply conditions, interact with expectations-driven housing market fluctuations.

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“…The approach is based on and Grimes and Aitken (2010), which in turn reflect a range of prior housing models. We add a further relationship to these prior studies -equation (2) -specifying population as a function of house prices.…”

Section: Appendix: Canonical Long Run Housing Market Modelmentioning

confidence: 99%

Two Countries, Sixteen Cities, Five Thousand Kilometres: How Many Housing Markets?

Greenaway‐McGrevy

¹

,

Grimes

²

,

Holmes

³

2016

SSRN Journal

Self Cite

10

0

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ii Terms of use: Documents in AbstractWe test whether a single housing market exists across sixteen cities covering two countries, Australia and New Zealand. Distances between these cities are vastly greater than commuting distances. We define a single housing market as one in which a single stochastic trend describes the long run path of real house prices in all cities. A strong form single housing market occurs when an innovation to the stochastic trend affects house prices across all cities multiplicatively to an equal degree. A weak form occurs when an innovation to the stochastic trend affects house prices in all cities, but not to an equal degree. We find that the sixteen housing markets are characterised by a weak form single housing market. The dynamic structure of adjustment reveals three groups of cities. House price shocks are first reflected in the price dynamics of a leading group of Australian cities (including Melbourne and Sydney), then flow to a group of follower cities comprising peripheral Australian and major New Zealand cities, and then to a group of laggard cities within New Zealand. Our theoretical model demonstrates how a weak form single housing market may arise due to differences between cities in house price responses to land prices, migration responses to house prices and/or land price responses to migration flows. JEL codesR21, R31

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“…Winkler (2016a) reviews the literature on housing supply. The nature of housing supply is found to help explain house price developments (e.g., Glaeser et al, 2008;Gyourko, 2009;Grimes & Aitken, 2010), housing affordability (e.g., Glaeser & Gyourko, 2002;Meen, 2011), cross-location income inequality (e.g., Glaeser et al, 2006;Saks, 2008), labor economics (e.g., Cannari et al, 2000;Andrews & Caldera Sanchez, 2011) and housing-related policy reform success (e.g., Swank et al, 2002;Hilber & Turner, 2014). Housing supply reform has great potential to enable the housing market to work better (Worldbank, 1993).…”

Section: Housing Supply and Housing Market Outcomesmentioning

confidence: 99%

“…Imbalances in this market might put financial and macroeconomic stability at risk. There are attempts to predict real estate prices, but the market forces alone cannot fully explain the price developments (e.g., Kasparova & White, 2001;Girouard et al, 2006;Ortalo-Magne & Rady, 2006;Andrews, 2010;Grimes & Aitken, 2010;Hiebert & Sydow, 2011;Kuttner & Shim, 2012). ECB (2003) stresses the local character of housing market dynamics.…”

Section: Housing Market Corrections and Financial Crisesmentioning

confidence: 99%

Housing, Finance, Policy and the Wider Economy

Winkler¹

2017

JMS

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Building an understanding of the complex dynamics between housing, finance, policy and the wider economy is a critical step towards the development of a strategy that permits policy makers to leverage resources and enable the housing market to function better in the pursuit of economic, financial and social objectives. Powerful real, legislative and financial circuits suggest that an enabling strategy for housing can support societal progress and wellbeing. By summarizing the key findings in the existing theoretical and empirical literature, this study helps to explain the complex interrelations between housing, finance, policy and the wider economy by using a simple model; it also deals with housing-related policies and their effects, examines the rational for housing market regulation, investigates whether housing market corrections threaten financial and macroeconomic stability, and asks whether policies are efficacious at controlling housing market outcomes. The important takeaways from this study are: (i) policy setting should be evidence-based, which necessitates further efforts to address existing data deficiencies; (ii) finance trends are in flux and policy effects can be asymmetric, which necessitates regular and critical housing market reviews to identify misallocation, dislocation and reform needs; (iii) improvement in the functioning of the housing market requires a coordinating authority that takes steps to reconcile the various housing market stakeholders' mutually incompatible interests and arrange for concerted policy and institutional reforms. The study closes with an outlook on future research.

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Housing Supply, Land Costs and Price Adjustment

Cited by 98 publications

References 50 publications

Heterogeneous Expectations, Boom-Bust Housing Cycles, and Supply Conditions: A Nonlinear Dynamics Approach

Heterogeneous Expectations, Boom-Bust Housing Cycles, and Supply Conditions: A Nonlinear Dynamics Approach

Two Countries, Sixteen Cities, Five Thousand Kilometres: How Many Housing Markets?

Housing, Finance, Policy and the Wider Economy

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