House Prices, Bubbles and City Size

Publication

The authors of this article build a theoretical model that relates house price, city size and the expected future growth of demand for housing. The model combines the Alonso-Mills model on urban economics with insights from financial economics on house prices. Estimating the model for cities in the US, they empirically validate the positive effect of city size on urban house prices. Moreover, their estimations confirm that an (unrealistic) increase in the expected growth of demand fuelled by the widespread availability of credit provides a better explanation for the recent bubble than inelastic housing supply that explained earlier bubbles.

This article is also available available in Dutch

Authors

Thissen M (PBL), Burger M (EUR), Oort F van (UU)

Specifications

Publication title
House Prices, Bubbles and City Size
Publication date
1 July 2010
Publication type
Publication
Magazine
ERIM Report Series, July 2010, Reference No. ERS-2010-030-ORG
Product number
92508