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Understanding Recent Trends in House Prices and Home Ownership Author info | Abstract | Publisher info | Download info | Related research | Statistics Robert J. Shiller () (Cowles Foundation, Yale University )
This paper looks at a broad array of evidence concerning the recent boom in home prices, and considers what this means for future home prices and the economy. It does not appear possible to explain the boom in terms of fundamentals such as rents or construction costs. A psychological theory, that represents the boom as taking place because of a feedback mechanism or social epidemic that encourages a view of housing as an important investment opportunity, fits the evidence better. Three case studies of past booms are considered for comparison: the US housing boom of 1950, the US farmland boom of the 1970s, and the temporary interruption 2004-5 of the UK housing boom. The paper concludes that while it is possible that prices will continue to go up as is commonly expected, there is a high probability of steady and substantial real home price declines extending over years to come.
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Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number
1630.
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Date of creation: Sep 2007Date of revision:
Oct 2007Handle: RePEc:cwl:cwldpp:1630Contact details of provider: Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA Phone: (203) 432-3702 Fax: (203) 432-6167 Web page: http://cowles.econ.yale.edu/ More information through EDIRC
Order Information: Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
For technical questions regarding this item, or to correct its listing, contact: (Glena Ames).
Keywords: Home prices ; Residential investment ; Mortgage ; Subprime crisis ; Business cycle ; Recession ; Boom ; Bubble ; Monetary policy ; Find related papers by JEL classification: R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Case, Karl E & Shiller, Robert J, 1989.
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Fabio C. Bagliano & Claudio Morana, 2008.
"Permanent and Transitory Dynamics in House Prices and Consumption: Cross-Country Evidence ,"
Working Papers
2, University of Torino, Department of Economics and Public Finance "G. Prato".
[Downloadable!]
Other versions: Andrea Beltratti & Claudio Morana, 2008.
"International shocks and national house prices ,"
ICER Working Papers - Applied Mathematics Series
14-2008, ICER - International Centre for Economic Research.
[Downloadable!]
Taylor D. Nadauld & Shane M. Sherlund, 2009.
"The role of the securitization process in the expansion of subprime credit ,"
Finance and Economics Discussion Series
2009-28, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!]
Elias Oikarinen, 2008.
"Interaction between housing prices and household borrowing - the Finnish case ,"
Discussion Papers
29, Aboa Centre for Economics.
[Downloadable!]
Christopher W. Crowe, 2009.
"Irrational Exuberance in the U.S. Housing Market: Were Evangelicals Left Behind? ,"
IMF Working Papers
09/57, International Monetary Fund.
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Elias Oikarinen, 2008.
"Interaction between Housing Prices and Household Borrowing in Finland ,"
Discussion Papers
1145, The Research Institute of the Finnish Economy.
[Downloadable!]
Hott, Christian, 2009.
"Explaining House Price Fluctuations ,"
Working Papers
2009-5, Swiss National Bank.
[Downloadable!]
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