The responsiveness of house prices to monetary policy shocks depends on the nature of the shock—expansionary versus contractionary—and on local housing supply elasticities. These findings are established using a panel of 263 US metropolitan areas. Expansionary monetary policy shocks have a larger impact on house prices in supply-inelastic areas. Contractionary shocks are orthogonal to housing supply elasticities. In supply-elastic areas, contractionary shocks have a greater impact on house prices than expansionary shocks do. The opposite holds true in supply-inelastic areas. We attribute this to asymmetric housing supply adjustments.
Aastveit, Knut Are, and André K. Anundsen.
"Asymmetric Effects of Monetary Policy in Regional Housing Markets."
American Economic Journal: Macroeconomics,
Business Fluctuations; Cycles
Interest Rates: Determination, Term Structure, and Effects
Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
Housing Supply and Markets