Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
International Dimensions of Housing Markets
Journal of Economic Perspectives
(pp. 87–106)
(Complimentary)
Abstract
We make the case that an international perspective on housing markets can help us understand why house prices and transactions volumes sometimes vary in ways that cannot easily be attributed to local economic factors. We first document cross-country and cross-time variation in house price-to-income ratios, and selectively discuss a growing literature which quantifies how international capital flows affect domestic housing markets. While this literature helps rationalize some of the rhetoric on globalization's effects on housing markets, it seems difficult at first glance to attribute price variation at the aggregate housing market level to the relatively small absolute magnitudes of cross-border housing capital flows. We argue using a search and matching framework that housing market frictions can magnify the effect of seemingly modest shocks and lead to more widespread reverberation through the housing market, linking local outcomes to the global distributions of wealth, risk, and productivity.Citation
Badarinza, Cristian, and Tarun Ramadorai. 2025. "International Dimensions of Housing Markets." Journal of Economic Perspectives 39 (3): 87–106. DOI: 10.1257/jep.20241429Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets