Measurement and Determinants of House Prices: Demographic and Economic Effects

摘要

The document tests the adequacy of existing housing price measures and of commonassumptions about the factors that influence them. The authors found that, as expected, house prices varied strongly and inversely with changes in interest rates. They varied directly with both cyclical and longer-term changes in household income. Various demographic factors, such as the number and composition of households, also can affect real house prices. Interestingly, the study found that an unusually large increase in the number of households--such as that created when the baby boom generation entered into the housing and labor market in the 1960s--can actually depress housing prices initially. However, this trend reversed sharply in the 1970s when material costs increased and real mortgage interest rates decreased. It is estimated that with the aging of the baby boomers and the subsequent 'baby bust,' real house prices will rise by approximately 10 percent in the 1990s and by 13 percent over the next two decades.