Fundamental and Speculative Demands for Housing

March 19, 2019

Preview Citation

Format: Chicago

Weicheng Lian. Fundamental and Speculative Demands for Housing, (USA: International Monetary Fund, 2019) accessed September 19, 2024

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Summary

This paper separates the roles of demand for housing services and belief about future house prices in a house price cycle, by utilizing a feature of user-cost-of-housing that it is sensitive to demand for housing services only. Optimality conditions of producing housing services determine user-cost-of-housing and the elasticity of substitution between land and structures in producing housing services. I find that the impact of demand for housing services on house prices is amplified by a small elasticity of substitution, and demand explained four fifths of the U.S. house price boom in the 2000s.

Subject: Consumption, Housing, Housing prices, Land prices, National accounts, Price structures, Prices

Keywords: Asset Bubbles, Belief, Consumption, Consumption goods, House price trend, Housing, Housing Cycles, Housing demand shocks, Housing prices, Housing service, Land Prices, Land Share, Price change, Price structures, Production function, Services production function, Structure price, WP

Publication Details

Pages:

54
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/063
Stock No:

WPIEA2019063
ISBN:

9781498302722
ISSN:

1018-5941

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