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Price Exuberance and Contagion across Housing Markets: Evidence from US Metropolitan Areas

Chowdhury, Md Shahedur R.; Damianov, Damian S.; Escobari, Diego

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Md Shahedur R. Chowdhury

Diego Escobari


Contagion occurs when cross-market correlation increases because of a shock to one market. Identifying shocks as episodes of house price exuberance, we provide evidence for contagion effects among the largest metropolitan markets in the US. We find that changes in income, interest rates, and unemployment also create contagion effects. These empirical findings are consistent with a model in which shocks to house prices and economic variables relax household down payment constraints and increase household mobility and housing demand. These effects are explored in an equilibrium framework in which house prices and household choices are determined endogenously, and we account for this endogeneity in our empirical study. Our results are robust to various empirical specifications, and we discuss the implications of these findings for households and investors.

Journal Article Type Article
Acceptance Date Oct 25, 2022
Online Publication Date Nov 14, 2022
Publication Date Nov 14, 2022
Deposit Date Oct 26, 2022
Publicly Available Date Nov 15, 2023
Journal The Journal of Real Estate Finance and Economics
Print ISSN 0895-5638
Electronic ISSN 1573-045X
Publisher Springer
Peer Reviewed Peer Reviewed
Public URL


Accepted Journal Article (769 Kb)

Copyright Statement
This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at:

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