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

47 Pages Posted: 8 Dec 2020

See all articles by Yunhui Zhao

Yunhui Zhao

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2020

Abstract

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.

JEL Classification: G01, G18, G28, R38, O18, R31, G21, E25, H50

Suggested Citation

Zhao, Yunhui, US Housing Market During COVID-19: Aggregate and Distributional Evidence (September 1, 2020). Available at SSRN: https://ssrn.com/abstract=3744679 or http://dx.doi.org/10.2139/ssrn.3744679

Yunhui Zhao (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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