The impact of vacancy rates on house prices – An econometrical analysis

Sammanfattning: The purpose is to examine the relationship between the rates of vacant houses with the price of housing in different regions within the United States; the Northeast region, the Midwest region, the South region and the West region. Results are analyzed through economic theory on vacancy and house prices developed by (Wheaton, 1990). The model proposed examines annual GDP, Interest-rates and vacancy rates on the price of housing from 1963 to 2010. The data is region specific and collected from the US census, the Bureau of economic analysis and the Federal Reserve. The method used is the Engle-Granger test for cointegration. The results are mixed and while the Northeast exhibit most coherence with theory it is not in the normal inverse relationship with prices. Instead the prices increase as the rate of vacancy increases. In essence, the case for including vacancy rates in more models of house prices is relatively weak and variables such as real income have shown better cointegration results.