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A Valuation Approach In Housing Boom And Bust Cycles

Author

Listed:
  • Donald C. Keenan
  • Taewon Kim
  • Daniel C. Lee

Abstract

In the housing market, there is a pattern of gradual price rises and noticeably more sudden price drops. This is because in an up market, the market comparisons approach forces home loan underwriters to be reluctant to approve a bigger loan than what the contemporary market comparisons would indicate. In a down market, on the other hand, underwriters do not face any such restriction and hence prices can drop to the level fully reflecting the declining market condition. The traditionalextrapolation typically used in determining the “time” value adjustmentsneed to be used more cautiously.

Suggested Citation

  • Donald C. Keenan & Taewon Kim & Daniel C. Lee, 2019. "A Valuation Approach In Housing Boom And Bust Cycles," AfRES 2019-067, African Real Estate Society (AfRES).
    • Handle: RePEc:afr:wpaper:2019-067
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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