Researcher ORCID Identifier


Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Yong Kim

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2023 Christina H Nguyen


This paper examines the relationship between mortgage rates and housing permit activity in California’s 30 most-populous counties from 2001-2021. The study employs a multiple regression analysis to quantify the impact of changing mortgage rates on the supply of new housing represented by building permits in each county. The paper seeks to provide valuable insights into the economic incentives that drive residential development in California, and to contribute to a better understanding of the mechanisms through which interest rates impact the housing market. The analysis conducted in this study reveals a notable degree of heterogeneity among California's 30 most populous counties in terms of the relationship between mortgage rates and housing permit activity. After constricting the dataset to exclude the Great Financial Crisis and COVID-19 years, my findings suggest that the impact of mortgage rates on building permit applications varies across counties, indicating the importance of considering regional variation when examining this relationship. My analysis reveals a negative correlation between the thirty-year real rate coefficient from the regression and the average house price levels in each county. This finding suggests that as mortgage rates increase and make home ownership more expensive, building permit applications are likely to increase in counties with lower housing prices. Counties with higher average housing prices may see a decrease in permit activity. This relationship also displays significant heterogeneity between coastal and inland counties. Inland counties, which have been historically more affordable, have higher positive reactions to interest rate hikes. Coastal counties react negatively or become insignificant.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.