This paper focuses on the demographic and economic factors that affect the changes in prices of the housing market. The study focuses on the United States housing market after its recent collapse due to the US financial crisis of 2008. It also looks at the Chinese housing market based on the determinants that are observed in the United States. It will also examine the after effects of the One Child Policy enacted in 1979 on the housing prices. The study will look at the current situation with the Chinese housing market and its similarities to the United States housing market before the US financial crisis.
The study uses data from the United States Federal Bank of St. Louis’ Federal Reserve Economic Database (FRED) in a regression analysis to find the determinants of the National Composite Home Price Index for the United States, which tracks housing price fluctuation. The factors used are GDP, CPI, Supply of Homes, Real Median Income, Age Group “15-64”, Unemployment Rate, Mortgage Debt Outstanding, and Higher Education (Bachelor’s Degree or higher).
The results show that working age population of “15-64” is statistically significant in the change of housing prices. Using the model, we will forecast the housing prices in the year 2030 and 2050. The study will also explore the options for the United States and Chinese government to maintain a healthy and transparent housing market.
Li, Henry, "The Effects of Demographics on the Real Estate Market in the United States and China" (2014). Honors College Theses. 137.