Journal Article
Interest rates and the spatial polarization of housing markets
Autoren
Erscheinungsdatum
DOI
10.1257/aeri.20220367
JEL Classification
Schlagworte
Geldpolitik
Wirtschafts- & Finanzkrisen
Rising within-country differences in house values are a much debated trend in the U.S. and internationally. Using new long-run regional data for 15 advanced economies, we first 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 then 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.
