Endogenous rise and collapse of housing price An agent-based model of the housing market

Authored by Jiaqi Ge

Date Published: 2017

DOI: 10.1016/j.compenvurbsys.2016.11.005

Sponsors: No sponsors listed

Platforms: No platforms listed

Model Documentation: UML ODD Flow charts Mathematical description

Model Code URLs: Model code not found

Abstract

On the basis of interviews with local real estate agents, this study develops an agent-based model of housing market to determine the cause of rise and collapse of US housing price during the years immediately preceding the US financial crisis (2007-2009). We study the key factors affecting housing price volatility, such as lenient financing and speculation. The dynamic simulation findings in the study show in concrete terms how lenient lending practices combined with speculation can lead to increased volatility in housing price, including sharp rises immediately followed by collapses. The exploratory work in this study will contribute to the understanding of the causes of housing bubbles and inform policy decisions. (C) 2016 Elsevier Ltd. All rights reserved.

Tags

Agent-based model behavior Dynamics Speculation Policy land market housing market residential segregation mobility Bubble Housing bubble Lenient lending