New working paper: The topography of growth and decline – Local price dynamics within cities

My latest working paper researches within-city home price dynamics in bullish and bearish residential real estate markets. It contributes to the literature addressing the urban layout of cities by formulating and empirically testing a novel idea for changes in the price gradients across neighborhoods under different market regimes. It finds that the combination of city-wide falling home prices and declining population numbers hurts low-value neighborhoods most, while falling home-prices in cities with robust demographics do not lead to shifts in the within-city distribution of housing wealth. In addition, the paper confirms earlier findings on endogenous home price dynamics.

A new level of spatial detailedness is achieved by combining a high-quality data-set for The Netherlands with estimation techniques borrowed from the geoscience domain. The data comprise of 1.8 million single family home transactions and 0.8 million apartments sold by members of the Dutch Realtor Association (NVM). This is the first paper that estimates home price index surfaces for an entire country based on a spatial error model (SER).

Author: thies

Lecturer (Assistant Professor) for Real Estate Finance, Cambridge