TY - JOUR
T1 - A behavioral model of house prices
AU - Madsen, Jakob B.
PY - 2012/4/1
Y1 - 2012/4/1
N2 - This paper proposes a model in which house prices are determined by economy-wide nominal income and nominal mortgage payments in the short run, while being determined by acquisition costs in the long run. The model, to a large extent, explains the 1995-2007 housing market run-up in the OECD countries by lower mortgage repayments, decreasing nominal interest rates, and increasing nominal GDP, partly induced by a large inflow of migrants. Empirical estimates give strong support for the model and suggest that it explains house prices in the OECD better than alternative models.
AB - This paper proposes a model in which house prices are determined by economy-wide nominal income and nominal mortgage payments in the short run, while being determined by acquisition costs in the long run. The model, to a large extent, explains the 1995-2007 housing market run-up in the OECD countries by lower mortgage repayments, decreasing nominal interest rates, and increasing nominal GDP, partly induced by a large inflow of migrants. Empirical estimates give strong support for the model and suggest that it explains house prices in the OECD better than alternative models.
KW - Affordability
KW - Behavior of house prices
KW - Financial innovations
KW - Institutions
KW - Tobin's q
UR - http://www.scopus.com/inward/record.url?scp=84856030032&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2011.12.010
DO - 10.1016/j.jebo.2011.12.010
M3 - Article
AN - SCOPUS:84856030032
SN - 0167-2681
VL - 82
SP - 21
EP - 38
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
IS - 1
ER -