NEW TRENDS, OLD PEOPLE: MODELING THE EFFECTS OF POPULATION AGING ON HOUSE PRICES IN THE UNITED STATES AND JAPAN

Several countries are experiencing a new demographic trend called “population aging” that can significantly impact housing markets. Countries such as the United States and Japan are observing their share of elderly people expand. I use regression analysis to determine the relationship between house prices and population in the United States and Japan to assess the impacts of populating aging on housing. I then use the parameters estimated by the regression analyses along with population projections for the period 2015-2050 to simulate house price trends for these two countries. These regression and simulation tests merge aspects of past models on population aging and housing, compare the effects of population on real house prices in the United States and Japan, and support the claim that population aging lowers real house prices. The results of my model also predict that, compared to the United States, Japan’s real house prices will fall more dramatically.