This paper examines the welfare cost of rare housing disasters characterized by large drops in house prices. I construct an overlapping generations general equilibrium model with recursive preferences and housing disaster shocks. The likelihood and magnitude of housing disasters are inferred...

Loss aversion is a core concept in prospect theory that refers to people's asymmetric attitudes with respect to gains and losses. More specifically, losses loom larger than gains. With the capability of loss aversion to explain economic phenomena, some of which are puzzling under expected...

This paper examines the tail dependence between energy and housing markets in the United States by using cross-quantilogram approach. Our main finding shows a housing returns are dependent on the oil returns in a large part of the return distribution, and that the housing returns are more likely...

Residential segregation has been blamed for causing adverse social and economic effects, and contradicting to the ideology of a free and equal society. However, studies have documented that psychological and cultural benefits of such clustering. If households believe that it would provide...

Cities experience significant, near random walk productivity shocks, yet population is slow to adjust. In practise local population changes are dominated by variation in net migration, and we argue that understanding gross migration is essential to quantify how net migration may slow population...

We describe a rational expectations model in which speculative bubbles in house prices can emerge. Within this model both speculators and their lenders use interest-only mortgages (IOs) rather than traditional mortgages when there is a bubble. Absent a bubble, there is no tendency for IOs to be...

In models of optimal household behavior, the value of housing affects consumption, savings and other variables. But homeowners do not know the value of their house for certain until they sell, so while they live in their home they must rely on local house price data to estimate its value. This...

The house price in Hong Kong is well-known to be "unaffordable." This paper argues that the commonly used house price-to-income ratio may be misleading in an economy with almost half of the population living in either public rental housing or subsidized ownership. Moreover, we re-focus on the...

Modern geographic information system (GIS) tools have allowed a more careful examination of how the physical characteristics of a property's neighborhood and surrounding land uses are capitalized into property values. The ArcGIS Viewshed tool is a case in point: it identifies the cells in an...