US Housing Market during COVID-19: Aggregate and Distributional Evidence

September 25, 2020

Preview Citation

Format: Chicago

Yunhui Zhao. US Housing Market during COVID-19: Aggregate and Distributional Evidence, (USA: International Monetary Fund, 2020) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using zip code-level data and nonparametric estimation, I present eight stylized facts on the US housing market in the COVID-19 era. Some aggregate results are: (1) growth rate of median housing price during the four months (April-August 2020) since the Federal Reserve’s unprecedented monetary easing has accelerated faster than any four-month period in the lead-up to the 2007-09 global financial crisis; (2) the increase in housing demand in response to lower mortgage interest rates displays a structural break since March 2020 (housing demand has increased by much more than before). These results indicate either the existence of “fear of missing out” or COVID-induced fundamental changes in household behavior. In terms of distributional evidence, I find that the increase of housing demand seems more pronounced among the two ends of the income distribution, possibly reflecting relaxed liquidity constraints at the lower end and speculative demand at the higher end. I also find that the developments in housing price, demand, and supply since April 2020 are similar across urban, suburban, and rural areas. The paper highlights some potential unintended consequences of COVID-fighting policies and calls for further studies of the driving forces of the empirical findings.

Subject: COVID-19, Financial institutions, Health, Housing, Housing prices, Income, Mortgages, National accounts, Prices, Public expenditure review

Keywords: Consumption goods, COVID-19, Distributional effect, Finance system, Global, Growth rates, Housing, Housing crisis, Housing data, Housing demand, Housing demand response, Housing finance system, Housing price bubble, Housing prices, Housing supply, Housing supply composition, Income, Monetary easing, Mortgages, Supply composition, Systemic risk, US housing, WP

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/212
Stock No:

WPIEA2020212
ISBN:

9781513557816
ISSN:

1018-5941

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