This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

The Propagation of Demand Shocks through Housing Markets

  • Elliot Anenberg
  • Daniel Ringo
American Economic Journal: Macroeconomics
vol. 14, no. 3, July 2022
(pp. 481-507)
Download Full Text PDF

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.20200037

Additional 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
There are no comments for this article.
Login to Comment