Effect of Aging on Housing Prices: A Perspective from an Overlapping Generation Model

Sun, Tianyu and Chand, Satish and Sharpe, Keiran (2018): Effect of Aging on Housing Prices: A Perspective from an Overlapping Generation Model.

Abstract

This paper investigates the effect of aging on housing prices. It provides a theoretical explanation to address the on-going debate about this issue. The analysis demonstrates that aging has divergent effects on housing prices, depending on the net effects of a fall in fertility vis-à-vis a rise in longevity on demand for housing. In addition, the results suggest that aging could cause a turning point in the price dynamics. Before this turning point, aging would boost the prices; however, after this point, the prices are depressed because of aging. Furthermore, inequality of household utility is enlarged during the aging processes.

• Item Type: MPRA Paper
• Language: English
• Keywords: Aging Population; OLG Model; House Prices; Land Prices; Turning Point
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends, Macroeconomic Effects, and Forecasts; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R21 - Housing Demand; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

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