Effect of Ownership Composition on Property Prices and Rents: Evidence from Chinese Investment Boom in US Housing Markets

Jung Sakong
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Jung Sakong: https://www.chicagofed.org/people/s/sakong-jung

No WP-2021-12, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: A capital influx into local housing markets would be expected to increase house prices, but the spillover effect onto rental prices is theoretically ambiguous. I estimate both price impacts in U.S. residential housing markets using data from a boom in real estate purchases by buyers from China, which amounted to $200 billion of purchases made between 2010 and 2019. Using a novel method to measure these purchases and an instrumental variable for where purchases are made, I find a large positive house price impact. Consistent with investment q-theory, rents fall as constructions rise, especially in areas with elastic housing supply.

Keywords: Chinese investors; investment q-theory; house prices and rents (search for similar items in EconPapers)
JEL-codes: F21 R21 R31 (search for similar items in EconPapers)
Pages: 44
Date: 2021-08-16
New Economics Papers: this item is included in nep-isf and nep-ure
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DOI: 10.21033/wp-2021-12

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