Footnote:
Literaturverz. S. 43 - 45
Internetausg.: ftp://129.187.96.124/CESifo_WP/470.pdf
Description:
This paper presents a dynamic theory of housing market fluctuations. It develops a life-cycle model where households are heteroeneous with respect to income and preferences and mortgage lending is restricted by a down-payment requirement. The market interaction of young credit-constrained households with older or richer unconstrained households generates the following results. (1) Current income of young credit-constrainded households affects housing prices independentlyof aggregate income. (2) Housing prices and the number of housing transactions are positively correlated. (3) Housing prices over-react to income shocks. (4) A relation of the down-payment constraint triggers a boom-bust cycle. These results are consistent with patterns observed in the US and the UK.