A new version of this entry is available:
Loading...
Article
2024
The volatility of housing prices: Do different types of financial intermediaries affect housing market cycles differently?
The volatility of housing prices: Do different types of financial intermediaries affect housing market cycles differently?
Abstract (English)
Housing markets display several correlations to multiple economic sectors of an economy. Their enormous impact on economies’ health, wealth, and stability is uncontroversial. Interestingly, the forms of financing residential property vary widely between the different countries in terms of both, the available product types and the institutions offering them. This research examines the implications of different financial intermediaries on housing market cycles with special emphasis on two institutional types, conventional banks and building and loan associations. Introducing a heterogeneous agent-based model, the interactions of buyers, sellers, and the two types of credit institutions are assessed. Heterogeneous economic principles and expectations of agents create endogenous market conditions which are strongly influenced by the lending practices of financial intermediaries. Focusing primarily on collateral values to decide about lending, conventional banks may contribute to volatile housing markets which are prone to recessions. Building and loan associations, on the other hand, rely to a greater extent on endogenously created borrower information. Thus, they are able to cushion the volatility of house prices caused by procyclical mortgage lending of conventional banks and increase the stability of the housing market. Simulations show that the most stable market conditions are attained if both types of financial intermediaries serve the mortgage lending market jointly. Furthermore, transaction and homeownership rates are the highest in this market setting. These findings advocate in favor of diversified financial markets.
File is subject to an embargo until
This is a correction to:
A correction to this entry is available:
This is a new version of:
Other version
Notes
Publication license
Publication series
Published in
The journal of real estate finance and economics, 69 (2024), 377-408.
https://doi.org/10.1007/s11146-022-09907-y.
ISSN: 1573-045X
Other version
Faculty
Institute
Examination date
Supervisor
Cite this publication
Braun, J., Burghof, H.-P., Langer, J., & Sommervoll, D. E. (2024). The Volatility of Housing Prices: Do Different Types of Financial Intermediaries Affect Housing Market Cycles Differently? The journal of real estate finance and economics, 69. https://doi.org/10.1007/s11146-022-09907-y
Edition / version
Citation
DOI
ISSN
ISBN
Language
English
Publisher
Publisher place
Classification (DDC)
330 Economics
Collections
Original object
University bibliography
Standardized keywords (GND)
Sustainable Development Goals
BibTeX
@article{Braun2024,
doi = {10.1007/s11146-022-09907-y},
author = {Braun, Julia and Burghof, Hans-Peter and Langer, Julius et al.},
title = {The Volatility of Housing Prices: Do Different Types of Financial Intermediaries Affect Housing Market Cycles Differently?},
journal = {The Journal of Real Estate Finance and Economics},
year = {2024},
}