Is There a 'Bubble' in the Housing Market Now?

Jonathan McCarthy and Richard Peach ()

No 2005-PB-01, NFI Policy Briefs from Indiana State University, Scott College of Business, Networks Financial Institute

Abstract: Real home prices have been rising strongly since the mid-1990s, and have continued to do so even as the economy has weakened. This has sparked the concern as to whether there is a bubble in the housing market, the collapse of which could harm the overall economy. Taking into account fundamentals – including more appropriate price indices and interest rates – aggregate home prices are relatively high but not yet out of line. Home prices in some areas still may be set for a fall; however, prices in these areas typically have been volatile. Previous large home value declines in these areas have not had a sizable negative effect on the aggregate economy.

Keywords: housing prices; housing bubble; home price index (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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