DP15409 Location, Location, Location: Manufacturing and House Price Growth

Author(s):	Nir Jaimovich, Stephen Terry, Nicolas Vincent
Publication Date:	October 2020
Keyword(s):	House Prices, housing inequality, Manufacturing decline
JEL(s):
Programme Areas:	Monetary Economics and Fluctuations, Macroeconomics and Growth
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=15409

Exploiting data on tens of millions of housing transactions, we show that (1) house prices grew by less in manufacturing-heavy US regions and (2) that this pattern is especially present for the lowest-value homes. Counterfactual accounting exercises reveal that regional differences in the growth of these lowest-value homes more than fully account for an observed increase in overall house price inequality. We conclude that the relative economic decline of manufacturing- heavy areas extends far beyond income and employment flows to include shifts in important local asset prices, a pattern which matters for total house price inequality.