We use a model and show how inflation and mortgage loans based on nominal interest rates (NRMs), like FRMs, ARMs or IOs, are a source of instability for housing markets. NRMs allocate risk inappropriately and cause economic tensions due to the tilt effect (Lessard and Modigliani, 1975), the...

We develop an equilibrium model for residential housing transactions in an economy with houses that differ in their quality and households that differ in their planned holding horizon. We show that, in equilibrium, clientele effect persists, with long-horizon buyers overwhelmingly choosing...

Using a unique set of quarterly residential real estate price data for 12 major Chinese cities during the period from 1999 to 2010, this paper employs both relative measures and well-specified regression models to examine the impact of key fundamental factors on home prices. Our empirical...

This paper explores the potential for the housing market to inform public policy in Ireland by developing a model of the determinants of the cost of accommodation. It does this by using a rich dataset of sales and lettings accommodation costs in Ireland over the period 2006-2010. A large...

We explore the impact of different types of supply constraints on house prices in England by exploiting a unique panel dataset of 353 local planning authorities ranging from 1974 to 2008. Using exogenous variation from a policy reform, vote shares and historical density to identify the...

This paper introduces series of house and land prices for Australia's major capital cities for the period 1880-1970 which, spliced to modern data, give series spanning 1880-2010. The broad trends in prices for houses, land and rents highlight no significant movement in real prices for the first...

We investigate whether recently high U.S. house prices are justified by fundamental factors. The standard unit root and cointegration tests with aggregate data indicate that house rent is the only fundamental which has the same order of integration as the price, but these two variables are not...

This paper studies household beliefs during the recent US housing boom. To characterize the heterogeneity in households' views about housing and the economy, we perform a cluster analysis on survey responses at different stages of the boom. The estimation always finds a small cluster of...

From September 2011 to January 2015, the Swiss National Bank (SNB) implemented a minimum exchange rate regime (i.e. a one-sided target zone) vis-à-vis the euro to fight deflationary pressures in the aftermath of the Great Financial Crisis. During this period of unconventional monetary policy,...

In this paper, I study the recent swing in the new home sales price in a dynamic stochastic general equilibrium model that features sector-specific total factor productivity (TFP) shocks, agents who concern about model uncertainty (in the Knightian sense), indivisible labor in households'...