{
  "title": "Foreign Demand and Local House Prices: Evidence from the US",
  "publication": "IMF Working Papers, February 28, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028",
  "overlayPath": "/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/index.md",
  "summary": "We test whether foreign demand matters for local house prices in the US using an identification strategy based on the existence of “home bias abroad” in international real estate markets.",
  "sections": [
    {
      "heading": "Research question and identification strategy",
      "content": "- Research question: Do foreign demand shocks affect local house prices in the US?\n- Identification strategy: Exploits the existence of “home bias abroad” in international real estate markets; uses an extreme political crisis event abroad as a proxy for a strong and exogenous shift in foreign demand.\n- Key empirical comparison: Changes in house prices across neighbourhoods with varying concentrations of population originating from the crisis country."
    },
    {
      "heading": "Key findings",
      "content": "- House prices rise disproportionately more in neighbourhoods with a high concentration of population originating from the crisis country following the crisis event.\n- The effect is described as strong and persistent.\n- Robustness: The effect remains robust to the exclusion of major cities.\n- Cross-sectional pattern:\n  - Areas that were already expensive in the late 1990s experienced the strongest foreign demand shocks.\n  - Those same areas saw the biggest drop in affordability between 2000 and 2017.\n- Overall inference: Evidence suggests a non-trivial causal effect of foreign demand shocks on local house prices over the last 20 years, especially in neighbourhoods that were already rather unaffordable for the median household."
    },
    {
      "heading": "Subject matter and keywords",
      "content": "- Subjects: Foreign currency exposure, Housing, Housing prices, Money, National accounts, Population and demographics, Prices, Real estate prices\n- Keywords include: Capital Flows, Foreign currency exposure, foreign demand shocks, Global, house price, House Prices, Housing, housing affordability, housing boom, Housing prices, interaction term, Political Risk, Real estate prices, time series, WP\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/bundle-manifest.json)",
    "Authors: Damien Puy, Anil Ari, Yu Shi",
    "Published: February 28, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513529264.001",
    "Research question: Do foreign demand shocks affect local house prices in the US?",
    "Identification strategy: Exploits the existence of “home bias abroad” in international real estate markets; uses an extreme political crisis event abroad as a proxy for a strong and exogenous shift in foreign demand.",
    "Key empirical comparison: Changes in house prices across neighbourhoods with varying concentrations of population originating from the crisis country.",
    "House prices rise disproportionately more in neighbourhoods with a high concentration of population originating from the crisis country following the crisis event.",
    "The effect is described as strong and persistent.",
    "Robustness: The effect remains robust to the exclusion of major cities.",
    "Cross-sectional pattern:",
    "Overall inference: Evidence suggests a non-trivial causal effect of foreign demand shocks on local house prices over the last 20 years, especially in neighbourhoods that were already rather unaffordable for the median household.",
    "Subjects: Foreign currency exposure, Housing, Housing prices, Money, National accounts, Population and demographics, Prices, Real estate prices",
    "Keywords include: Capital Flows, Foreign currency exposure, foreign demand shocks, Global, house price, House Prices, Housing, housing affordability, housing boom, Housing prices, interaction term, Political Risk, Real estate prices, time series, WP"
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/index.md",
    "json": "/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/index.json",
    "bundleManifest": "/en/publications/wp/issues/2020/02/28/foreign-demand-and-local-house-prices-evidence-from-the-us-49028/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-18T16:45:10.129Z"
}