Effects of Uncertainty and Labor Demand Shocks on the Housing Market
||Lee, Gabriel; Binh Nguyen Thanh; Johannes Strobel
||Effects of Uncertainty and Labor Demand Shocks on the Housing Market
||23rd Annual European Real Estate Society Conference in Regensburg, Germany
||This paper investigates the simultaneous effects of uncertainty and local labor demand shocks on the U.S. housing market. We use binary uncertainty indicators and a Bartik (1991) index to quantify both uncertainty and labor demand shocks. Controlling for a broad set of variables in fixed-effects regressions, we find uncertainty shocks exhibit small adverse level effects, where housing prices and median sell prices decrease in the amount of 1.4% and 1.8%, respectively, and the percentage loss of houses selling increase by .52%-points. More importantly, however, when both shocks are introduced the effects of uncertainty shocks on the housing market dominate that of local labor demand shocks on housing prices, median sell prices, the share of houses selling for loss, transactions and homes sold as foreclosure. These results lends to the support for the presence of real options effects in the housing market.
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||Urban Economics & Planning
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