Exploring Metropolitan Housing Price Volatility

This paper uses MSA level data and a panel,VAR model,to analyze,the dynamic,determination and impact of the volatility of single-family home,value appreciation. We find that the volatility can be magnified by an exogenous increase in the home appreciation rate, responds to changes in the population growth rate, and is serially correlated. Moreover, an exogenous increase in the volatility increases the home appreciation rate, reduces personal income growth rate and affects population growth rate. Our analysis also provides strong evidence of heterogeneityof the MSA housing markets. JEL classification: C52, G10, R21, R31 Key words: home value appreciation, housing price volatility, urban economy, panel VAR