Housing return volatility in large metropolitan areas in the United States across market cycles (2000–2022)

Abstract

This study compares the inter- and intra-metropolitan patterns of housing return volatility in four market phases (boom, bust, recovery, and pandemic) in the United States between 2000 and 2022. The study finds a weak correlation between the physical characteristics of neighborhoods and housing market volatility. Notably, higher-density neighborhoods show greater market volatility throughout the boom, bust, and recovery phases but the trend is reversed during the pandemic period. However, the sociodemographic composition of neighborhoods exhibits a stronger correlation with market volatility. Specifically, housing markets in Black neighborhoods demonstrate persistently higher volatility, irrespective of market fluctuations. Similarly, low-income neighborhoods are consistently associated with greater volatility before the pandemic. The study does not find a consistent association between housing supply and market volatility across the four market phases. It shows that during the 2008 housing downturn, housing markets were less volatile in metropolitan areas with stricter land use regulations, less developable land, fewer home constructions, and better natural amenities.

Keywords:

• Housing return volatility
• housing market volatility
• spatial pattern
• sociodemographic disparity
• housing supply

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Funding

This study received a Gazarian Summer Research grant from the Gazarian Real Estate Center at the California State University Fresno.

Notes on contributors

Hongwei Dong

Hongwei Dong is a professor in the Department of Geography and City & Regional Planning at California State University Fresno. His research focuses on housing and real estate, land use and transportation, and smart and healthy cities.