The Run-up in Home Prices: A Bubble

Dean Baker

Challenge, 2002, vol. 45, issue 6, pages 93-119

Abstract: In the past seven years, home purchase prices have risen nearly thirty percentage points more than the rate of inflation. This run-up in housing prices has increased housing wealth by more than $2.6 trillion, compared to home prices' just keeping pace with inflation. The result is an average of more than $35,000 of additional wealth for each of the nation's 73.3 million homeowners. This paper examines whether the increase in home prices is grounded in fundamental economic factors, or whether it is simply a bubble, similar to the stock market bubble.

Date: 2002

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