EconPapers    
Economics at your fingertips  
 

Housing Bubbles

Edward L. Glaeser and Charles G. Nathanson

Chapter Chapter 11 in Handbook of Regional and Urban Economics, 2015, vol. 5, pp 701-751 from Elsevier

Abstract: Housing markets experience substantial price volatility, short-term price change momentum, and mean reversion of prices over the long run. Together, these features, particularly at their most extreme, produce the classic shape of an asset bubble. In this chapter, we review the stylized facts of housing bubbles and discuss theories that can potentially explain events like the boom–bust cycles of the 2000s. One set of theories assumes rationality and uses idiosyncratic features of the housing market, such as intensive search and short-selling constraints, to explain the stylized facts. Cheap credit provides a particularly common rationalization for price booms, but temporary periods of low interest rates will not explain massive price swings in simple rational models. An incorrectly underpriced default option can make rational bubbles more likely. Many nonrational explanations for real estate bubbles exist, but the most promising theories emphasize some form of trend chasing, which in turn reflects boundedly rational learning.

Keywords: Real estate; Housing; Behavioral economics; Land; Bubble; Speculation; R21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/B9780444595317000119
Full text for ScienceDirect subscribers only

Related works:
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:eee:regchp:5-701

DOI: 10.1016/B978-0-444-59531-7.00011-9

Access Statistics for this chapter

More chapters in Handbook of Regional and Urban Economics from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-08-08
Handle: RePEc:eee:regchp:5-701