After the Fall: An Ex Post Characterization of Housing Price Declines Across Metropolitan Areas
AbstractHousing prices have plummeted across the United States. This paper examines differences in the magnitude of housing price decreases across metropolitan areas. A relatively small number of housing market variables observable before the fall are capable of explaining over 70% of the considerable variation in price declines. An additional nonparametric analysis suggests that exceeding particular thresholds for some of the key predictors is associated with much larger price drops. These findings are consistent with historical price patterns and raise questions about the validity of mortgage pricing and risk diversification norms in the US. The analysis points to a set of stylized facts concerning the housing price bubble that need to be explained and suggests fruitful hypotheses for understanding the dramatic housing price declines.
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Bibliographic InfoPaper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number qt7ng9d927.
Date of creation: 03 Dec 2009
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home price indices; housing bubble; Social and Behavioral Sciences;
Other versions of this item:
- Richard T. Carson & Samuel R. Dastrup, 2013. "After The Fall: An Ex Post Characterization Of Housing Price Declines Across Metropolitan Areas," Contemporary Economic Policy, Western Economic Association International, vol. 31(1), pages 22-43, 01.
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