Working Paper: NBER ID: w2794
Authors: N. Gregory Mankiw; David N. Weil
Abstract: This paper examines the impact of major demographic changes on the housing market in the United States. The entry of the Baby Boom generation into its house-buying years is found to be the major cause of the increase in real housing prices in the l97Os. Since the Baby Bust generation is now entering its house-buying years, housing demand will grow more slowly in the 1990s than in any time in the past forty years. If the historical relation between housing demand and housing prices continues into the future, real housing prices will fall substantially over the next two decades.
Keywords: Demographic Changes; Housing Market; Baby Boom; Baby Bust; Housing Demand; Real Housing Prices
JEL Codes: J11; R21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| entry of the baby boom generation into house-buying years (R21) | increased housing demand (R21) |
| increased housing demand (R21) | increased real housing prices (R31) |
| entry of the baby bust generation into house-buying years (J11) | decreased housing demand growth (R21) |
| increased housing demand (R21) | future housing prices (R31) |
| demographic changes (J11) | housing market dynamics (R31) |