Housing Bubbles with Phase Transitions

Tomohiro Hirano and Alexis Akira Toda

No 24-009E, CIGS Working Paper Series from The Canon Institute for Global Studies

Abstract: We analyze equilibrium housing prices in an overlapping generations model with perfect housing and rental markets. The economy exhibits a two-stage phase transition: as the income of home buyers rises, the equilibrium regime changes from fundamental to bubble possibility, where fundamental and bubbly equilibria can coexist. With even higher incomes, fundamental equilibria disappear and housing bubbles become a necessity. Even with low current incomes, housing bubbles may emerge if home buyers have access to credit or have high future income expectations. Contrary to widely-held beliefs, fundamental equilibria in the possibility regime are inefficient despite housing being a productive non-reproducible asset.

Pages: 52
Date: 2024-05
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cigs.canon/en/uploads/2024/05/2405_24-009E_hirano.pdf (application/pdf)

Related works:
Working Paper: Housing Bubbles with Phase Transitions (2024)
Working Paper: Housing Bubbles with Phase Transitions (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cnn:wpaper:24-009e

Access Statistics for this paper

More papers in CIGS Working Paper Series from The Canon Institute for Global Studies Contact information at EDIRC.
Bibliographic data for series maintained by The Canon Institute for Global Studies ().