Oil Prices and Urban Housing Demand

41 Pages Posted: 20 Oct 2017

See all articles by William D. Larson

William D. Larson

Federal Housing Finance Agency

Weihua Zhao

University of Louisville - College of Business - Department of Economics

Date Written: September 2016

Abstract

We develop a model of a monocentric, oil-exporting city. The model predicts producer price and transportation cost effects of oil price changes on the house price gradient. Empirical findings support the predictions, with house price changes positively linked to the price of oil in cities specialized in oil and gas-related industries, and negatively linked in suburban areas of all cities. These results quantify the large and differential risks to house prices associated with oil price changes both within and across cities.

Keywords: Transportation Cost, Gasoline Price, Industrial Specialization, Input-Output Model, Economic Base Model

JEL Classification: R30, Q4

Suggested Citation

Larson, William D. and Zhao, Weihua, Oil Prices and Urban Housing Demand (September 2016). Available at SSRN: https://ssrn.com/abstract=3055935 or http://dx.doi.org/10.2139/ssrn.3055935

William D. Larson

Federal Housing Finance Agency ( email )

400 7th Street SW
Washington, DC 20552
United States

Weihua Zhao (Contact Author)

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

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