Template-Type: ReDIF-Paper 1.0

Author-Name: Gabriel Lee
Author-X-Name-First: Gabriel
Author-X-Name-Last: Lee

Author-Name: Binh Nguyen Thanh
Author-X-Name-First: Binh 
Author-X-Name-Last: Nguyen Thanh

Author-Name: Johannes Strobel
Author-X-Name-First: Johannes
Author-X-Name-Last: Strobel

Title: Effects of Macroeconomic Uncertainty and Labor Demand Shocks on the Housing Market

	
Abstract: This paper shows that macroeconomic uncertainty affects the housing market in two signi?ficant ways. First, uncertainty shocks adversely affect housing prices but not the quantities that are traded. Controlling for a broad set of variables in fi?xed-effects regressions, we ?find that uncertainty shocks reduce both housing prices and median sales prices in the amount of 1.4% and 1.8%, respectively, but the effect is not statistically signi?cant for the percentage changes of all homes sold. Second, when both uncertainty and local demand shocks are introduced, the effects of uncertainty on the housing market dominate that of local labor demand shocks on housing prices, median sell prices, the share of houses selling for loss, and transactions. The aforementioned effects are largest for the states that exhibit relatively high housing price volatilities, suggesting real options effects in the housing market during the times of high uncertainty.
Length: 29 pages
Creation-Date:  2017-06
File-URL: http://www.bgpe.de/texte/DP/170_LeeNguyenThanhStrobel.pdf
File-Format: Application/pdf
File-Function: First version, 2017
Number: 170
Classification-JEL: E4, E5, E2, R2, R3
Keywords: Bartik labor demand shocks, time-varying uncertainty shocks, real options effects, housing market
Handle: RePEc:bav:wpaper:170_LeeNguyenThanhStrobel