Interest rates and the spatial polarization of housing markets Francisco Amaral, Martin Dohmen, Sebastian Kohl and Moritz Schularick
Contributor(s): Amaral, Francisco
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Material type: 
ArticleSubject(s): INTERES | TIPOS | PRESTAMOS HIPOTECARIOS | VIVIENDA | PRECIOS | MERCADO | ESTADOS UNIDOS
In:
The American Economic Review v. 6, n. 1, March 2024, p. 89-104Summary: Rising within-country differences in house values are a much-debated trend in the United States and internationally. Using new long-run regional data for 15 advanced economies, we show that standard explanations linking growing price dispersion to rent dispersion are contradicted by an important stylized fact: rent dispersion has increased far less than price dispersion. We propose a new explanation: a uniform decline in real risk-free interest rates can have heterogeneous spatial effects on house values. Falling real safe rates disproportionately push up prices in large agglomerations where initial rent-price ratios are low, leading to housing market polarization on the national level.
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Resumen.
Bibliografía.
Rising within-country differences in house values are a much-debated trend in the United States and internationally. Using new long-run regional data for 15 advanced economies, we show that standard explanations linking growing price dispersion to rent dispersion are contradicted by an important stylized fact: rent dispersion has increased far less than price dispersion. We propose a new explanation: a uniform decline in real risk-free interest rates can have heterogeneous spatial effects on house values. Falling real safe rates disproportionately push up prices in large agglomerations where initial rent-price ratios are low, leading to housing market polarization on the national level.
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