K.H. Tiedemann (Canada)
Model identification, housing market, house prices, ordinary least squares regression, maximum likelihood regression.
This paper develops and estimates a quarterly econometric model of United States housing prices for the period from 1993:1 through 2008:2. The main findings are as follows. First, an increase in the wage rate increases house prices. Second, an increase in the mortgage default rate decreases house prices. Third, an increase in the mortgage interest rate decreases house prices. Fourth, an increase in the annual percentage change in the housing price index decreases house prices. These four findings are all consistent with the predictions of our housing market model.
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