Are Housing Bubbles Contagious? A Case Study of Las Vegas and Los Angeles Home Prices
AbstractThis paper asks whether speculative house-price pressure in an economic center can spill into related housing markets. In other words, are bubbles contagious? I develop a theoretical model that allows for speculative price appreciation to spread from one market to another. I estimate an error-correction model using quarterly housing data for Las Vegas and Los Angeles and fundamental market variables from 1978 Quarter 2 through 2008 Quarter 1. Las Vegas prices show significant persistence and adjust slowly to disequilibrium. Contagious price and income growth from the Los Angeles market sustained by naïve expectations contributed to the bubble that formed in Las Vegas
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Land Economics.
Volume (Year): 87 (2011)
Issue (Month): 1 ()
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Web page: http://le.uwpress.org/
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
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- Ge, Jiaqi, 2013. "Endogenous Rise and Collapse of Housing Prices," Staff General Research Papers, Iowa State University, Department of Economics 36279, Iowa State University, Department of Economics.
- Jiaqi Ge, 2013. "Endogenous Formation and Collapse Of Housing Bubbles," Staff General Research Papers, Iowa State University, Department of Economics 36277, Iowa State University, Department of Economics.
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