Revisiting metropolitan house price-income relationships

Elias Oikarinen; Steven C. Bourassa; Martin Hoesli; Janne Engblom

doi:10.1016/j.jhe.2023.101946

Revisiting metropolitan house price-income relationships

Elias Oikarinen^*
, Steven C. Bourassa
, Martin Hoesli
, Janne Engblom

^*Corresponding author for this work

University of Oulu
University of Turku
University of Washington
University of Geneva
University of Aberdeen

Research output: Contribution to journal › Article › Scientific › peer-review

14 Citations (Scopus)

152 Downloads (Pure)

Abstract

We explore long-term patterns of the house price-income relationship across the 70 largest U.S. metropolitan areas. In line with a standard spatial equilibrium model, our empirical findings indicate that regional house price-income ratios are typically not stable, even over the long run. In contrast, panel regression models that relate house prices to aggregate personal income and allow for regional heterogeneity yield stationary long-term relationships in most areas. The house price-income relationship varies significantly across locations, underscoring the importance of using estimation techniques that allow for spatial heterogeneity. The substantial regional differences are closely related to the elasticity of housing supply.

Original language	English
Article number	101946
Number of pages	21
Journal	Journal of Housing Economics
Volume	61
DOIs	https://doi.org/10.1016/j.jhe.2023.101946
Publication status	Published - Sept 2023
MoE publication type	A1 Journal article-refereed

Funding

For helpful comments, we thank the editor Jeff Zabel and two anonymous reviewers, as well as Christian Hilber, Simon Lapointe and Oskari Vähämaa, and participants at the International AREUEA conference in Amsterdam, ARES conference in San Diego, ERSA conference in Cork, ERES conference in Delft, Annual Meeting of the Finnish Economic Association, and research seminar at the University of Cambridge. We also thank Andrew VanValin for preparing the maps. This work was supported by the Strategic Research Council at the Academy of Finland (first author; decision numbers 352450 and 352451) and the West-Finland Housing Association of Public Utility. For helpful comments, we thank the editor Jeff Zabel and two anonymous reviewers, as well as Christian Hilber, Simon Lapointe and Oskari Vähämaa, and participants at the International AREUEA conference in Amsterdam, ARES conference in San Diego, ERSA conference in Cork, ERES conference in Delft, Annual Meeting of the Finnish Economic Association, and research seminar at the University of Cambridge. We also thank Andrew VanValin for preparing the maps. This work was supported by the Strategic Research Council at the Academy of Finland (first author; decision numbers 352450 and 352451 ) and the West-Finland Housing Association of Public Utility .

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 11 Sustainable Cities and Communities

Keywords

House prices
Personal income
Regional heterogeneity
Spatial equilibrium
Supply elasticity

Access to Document

10.1016/j.jhe.2023.101946Licence: CC BY

1-s2.0-S1051137723000335-mainFinal published version, 5.3 MBLicence: CC BY

Cite this

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title = "Revisiting metropolitan house price-income relationships",

abstract = "We explore long-term patterns of the house price-income relationship across the 70 largest U.S. metropolitan areas. In line with a standard spatial equilibrium model, our empirical findings indicate that regional house price-income ratios are typically not stable, even over the long run. In contrast, panel regression models that relate house prices to aggregate personal income and allow for regional heterogeneity yield stationary long-term relationships in most areas. The house price-income relationship varies significantly across locations, underscoring the importance of using estimation techniques that allow for spatial heterogeneity. The substantial regional differences are closely related to the elasticity of housing supply.",

keywords = "House prices, Personal income, Regional heterogeneity, Spatial equilibrium, Supply elasticity",

author = "Elias Oikarinen and Bourassa, \{Steven C.\} and Martin Hoesli and Janne Engblom",

note = "Funding Information: For helpful comments, we thank the editor Jeff Zabel and two anonymous reviewers, as well as Christian Hilber, Simon Lapointe and Oskari V{\"a}h{\"a}maa, and participants at the International AREUEA conference in Amsterdam, ARES conference in San Diego, ERSA conference in Cork, ERES conference in Delft, Annual Meeting of the Finnish Economic Association, and research seminar at the University of Cambridge. We also thank Andrew VanValin for preparing the maps. This work was supported by the Strategic Research Council at the Academy of Finland (first author; decision numbers 352450 and 352451) and the West-Finland Housing Association of Public Utility. Funding Information: For helpful comments, we thank the editor Jeff Zabel and two anonymous reviewers, as well as Christian Hilber, Simon Lapointe and Oskari V{\"a}h{\"a}maa, and participants at the International AREUEA conference in Amsterdam, ARES conference in San Diego, ERSA conference in Cork, ERES conference in Delft, Annual Meeting of the Finnish Economic Association, and research seminar at the University of Cambridge. We also thank Andrew VanValin for preparing the maps. This work was supported by the Strategic Research Council at the Academy of Finland (first author; decision numbers 352450 and 352451 ) and the West-Finland Housing Association of Public Utility . Publisher Copyright: {\textcopyright} 2023 The Author(s)",

year = "2023",

month = sep,

doi = "10.1016/j.jhe.2023.101946",

language = "English",

volume = "61",

journal = "Journal of Housing Economics",

issn = "1051-1377",

publisher = "Elsevier",

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AU - Oikarinen, Elias

AU - Bourassa, Steven C.

AU - Hoesli, Martin

AU - Engblom, Janne

N1 - Funding Information: For helpful comments, we thank the editor Jeff Zabel and two anonymous reviewers, as well as Christian Hilber, Simon Lapointe and Oskari Vähämaa, and participants at the International AREUEA conference in Amsterdam, ARES conference in San Diego, ERSA conference in Cork, ERES conference in Delft, Annual Meeting of the Finnish Economic Association, and research seminar at the University of Cambridge. We also thank Andrew VanValin for preparing the maps. This work was supported by the Strategic Research Council at the Academy of Finland (first author; decision numbers 352450 and 352451) and the West-Finland Housing Association of Public Utility. Funding Information: For helpful comments, we thank the editor Jeff Zabel and two anonymous reviewers, as well as Christian Hilber, Simon Lapointe and Oskari Vähämaa, and participants at the International AREUEA conference in Amsterdam, ARES conference in San Diego, ERSA conference in Cork, ERES conference in Delft, Annual Meeting of the Finnish Economic Association, and research seminar at the University of Cambridge. We also thank Andrew VanValin for preparing the maps. This work was supported by the Strategic Research Council at the Academy of Finland (first author; decision numbers 352450 and 352451 ) and the West-Finland Housing Association of Public Utility . Publisher Copyright: © 2023 The Author(s)

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N2 - We explore long-term patterns of the house price-income relationship across the 70 largest U.S. metropolitan areas. In line with a standard spatial equilibrium model, our empirical findings indicate that regional house price-income ratios are typically not stable, even over the long run. In contrast, panel regression models that relate house prices to aggregate personal income and allow for regional heterogeneity yield stationary long-term relationships in most areas. The house price-income relationship varies significantly across locations, underscoring the importance of using estimation techniques that allow for spatial heterogeneity. The substantial regional differences are closely related to the elasticity of housing supply.

AB - We explore long-term patterns of the house price-income relationship across the 70 largest U.S. metropolitan areas. In line with a standard spatial equilibrium model, our empirical findings indicate that regional house price-income ratios are typically not stable, even over the long run. In contrast, panel regression models that relate house prices to aggregate personal income and allow for regional heterogeneity yield stationary long-term relationships in most areas. The house price-income relationship varies significantly across locations, underscoring the importance of using estimation techniques that allow for spatial heterogeneity. The substantial regional differences are closely related to the elasticity of housing supply.

KW - House prices

KW - Personal income

KW - Regional heterogeneity

KW - Spatial equilibrium

KW - Supply elasticity

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JO - Journal of Housing Economics

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ER -

Revisiting metropolitan house price-income relationships

Abstract

Funding

UN SDGs

Keywords

Access to Document

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Fingerprint

Smartland: Smart land use policy for sustainable urbanization (Smartland), 2nd period

Cite this

Revisiting metropolitan house price-income relationships

Abstract

Funding

UN SDGs

Keywords

Access to Document

Other files and links

Fingerprint

Projects

Smartland: Smart land use policy for sustainable urbanization (Smartland), 2nd period

Cite this