Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280846 
Year of Publication: 
2023
Series/Report no.: 
Working Papers No. 23-2
Publisher: 
Federal Reserve Bank of Boston, Boston, MA
Abstract: 
We study the joint evolution of prices and rents of residential property. After constructing rent and price indices for renter- and owner-occupied properties, we decompose the change in the price of occupant-owned property into (1) changes in rent, (2) changes in the relative prices of investor- and occupant-owned properties, and (3) changes in the price-rent ratio. Via a simple model, we link our decomposition to different sources of variation in house prices. We argue that while the 2000s boom was plausibly driven by exuberant expectations, the boom of the 2020s more likely resulted from a preference shock.
Subjects: 
house price overvaluation
rent-price ratio
credit shocks
housing bubbles
JEL: 
R30
R31
E30
E32
H31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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