The impact of energy prices: A housing market analysis

Abstract

This paper investigates the effect of energy costs on the housing market response. As the effect of energy costs has not been specifically investigated before in the literature, both a linear and non-linear model were investigated. The choice of the appropriate model was determined using the Box-Cox transformation technique. The chosen model was then validated. The results reveal that in the Spokane, Washington, area, where energy costs are relatively low, energy prices do not have a significant effect on market response. However, applying the same methodology to areas where energy costs are higher might produce different results.