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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.

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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.

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