Abstract:
This paper studies the secular increase in US income inequality and its relation to growing house prices over the past three decades. We explore income inequality’s effect on house prices based on a high-frequency (quarterly) data-set for all US states, including the District of Columbia. The analysis shows that higher income inequality decreases the growth rate of house prices. However, the relationship differs for the Northeast region. We find higher income inequality corresponds with higher house prices across the states within the Northeast region.