Speculative housing markets and rent control : insights from nonlinear economic dynamics

Faculty/Professorship: Economic Policy  
Author(s): Schmitt, Noemi ; Westerhoff, Frank H.  
Title of the Journal: Journal of economic interaction and coordination
ISSN: 1860-711X
Publisher Information: Berlin ; Heidelberg : Springer
Year of publication: 2022
Volume: 17
Issue: 1
Pages: 141–163
Year of first publication: 2021
Language(s): English
Open Access by Projekt DEAL
DOI: 10.1007/s11403-020-00312-3
We propose a novel housing market model to explore the effectiveness of rent control. Our model reveals that the expectation formation and learning behavior of boundedly rational homebuyers, switching between extrapolative and regressive expectation rules subject to their past forecasting accuracy, may create endogenous housing market dynamics. We show that policymakers may use rent control to reduce the rent level, although such policies may have undesirable effects on the house price and the housing stock. However, we are also able to prove that well-designed rent control may help policymakers to stabilize housing market dynamics, even without creating housing market distortions.
GND Keywords: Wohnungsmarkt; Mietpreis; Politische Kontrolle; Erwartungsbildung; Dynamisches Modell; Gleichgewicht
Keywords: Housing market dynamics, Expectation formation and learning behavior, Rent control, Steady state, stability and out-of-equilibrium analysis
DDC Classification: 330 Economics  
RVK Classification: QY 500   
Peer Reviewed: Ja
International Distribution: Ja
Type: Article
URI: https://fis.uni-bamberg.de/handle/uniba/53021
Release Date: 27. January 2022