Clustered housing cycles

Hernandez-Murillo, Ruben; Owyang, Michael T.; Rubio, Margarita

Abstract

Using a panel of U.S. city-level building permits data, we estimate a Markov-switching model of housing cycles that allows cities to systematically deviate from the national housing cycle. These deviations occur for clusters of cities that experience simultaneous housing contractions. We find that cities do not form housing regions in the traditional geographic sense. Instead, similarities in factors affecting the demand for housing (such as population growth or availability of credit) appear to be more important determinants of cyclical co-movements than similarities in factors affecting the supply for land (such as the availability of developable land or the elasticity of land supply).

Citation

Hernandez-Murillo, R., Owyang, M. T., & Rubio, M. (2017). Clustered housing cycles. Regional Science and Urban Economics, 66, https://doi.org/10.1016/j.regsciurbeco.2017.06.003

• Journal Article Type: Article
• Acceptance Date: Jun 19, 2017
• Online Publication Date: Jun 20, 2017
• Publication Date: Sep 1, 2017
• Deposit Date: Jun 21, 2017
• Publicly Available Date: Dec 21, 2018
• Journal: Regional Science and Urban Economics
• Print ISSN: 0166-0462
• Electronic ISSN: 0166-0462
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 66
• DOI: https://doi.org/10.1016/j.regsciurbeco.2017.06.003
• Keywords: Clustered Markov switching, business cycles, building permits, co-movements
• Public URL: https://nottingham-repository.worktribe.com/output/966747
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S0166046217302272
• Contract Date: Jun 21, 2017