A Nation of Gamblers: Real Estate Speculation and American History
The great housing convulsion that buffeted America between 2000 and 2010 has historical precedents, from the frontier land boom of the 1790s to the skyscraper craze of the 1920s. But this time was different. There was far less real uncertainty about fundamental economic and geographic trends, making the convulsion even more puzzling. During historic and recent booms, sensible models could justify high prices on the basis of seemingly reasonable projections about stable or growing prices. The recurring error appears to be a failure to anticipate the impact that elastic supply will eventually have on prices, whether for cotton in Alabama in 1820 or land in Las Vegas in 2006. Buyers don't appear to be irrational but rather cognitively limited investors who work with simple heuristic models, instead of a comprehensive general equilibrium framework. Low interest rates rarely seem to drive price growth; underpriced default options are a more common contributor to high prices. The primary cost of booms has not typically been overbuilding, but rather the financial chaos that accompanies housing downturns.
Volume (Year): 103 (2013)
Issue (Month): 3 (May)
|Contact details of provider:|| Web page: https://www.aeaweb.org/aer/|
More information through EDIRC
|Order Information:||Web: https://www.aeaweb.org/subscribe.html|
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.:
- Fernando Ferreira, 2008.
"You Can Take it With You: Proposition 13 Tax Benefits, Residential Mobility, and Willingness to Pay for Housing Amenities,"
08-15, Center for Economic Studies, U.S. Census Bureau.
- Ferreira, Fernando, 2010. "You can take it with you: Proposition 13 tax benefits, residential mobility, and willingness to pay for housing amenities," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 661-673, October.
- repec:oup:qjecon:v:125:y:2010:i:3:p:1253-1296 is not listed on IDEAS
- Edward L. Glaeser & Joseph Gyourko & Albert Saiz, 2008.
"Housing Supply and Housing Bubbles,"
NBER Working Papers
14193, National Bureau of Economic Research, Inc.
- James Poterba, 2004.
"Taxation and Corporate Payout Policy,"
American Economic Review,
American Economic Association, vol. 94(2), pages 171-175, May.
- Marshall, Alfred, 1890.
"The Principles of Economics,"
History of Economic Thought Books,
McMaster University Archive for the History of Economic Thought, number marshall1890.
- Officer, Lawrence H., 1983. "Dollar-Sterling Mint Parity and Exchange Rates, 1791–1834," The Journal of Economic History, Cambridge University Press, vol. 43(03), pages 579-616, September.
- Jason Barr, 2010.
"Skyscrapers and the Skyline: Manhattan, 1895-2004,"
Real Estate Economics,
American Real Estate and Urban Economics Association, vol. 38(3), pages 567-597.
- Graves, Philip E., 1980. "Migration and climate," MPRA Paper 19916, University Library of Munich, Germany.
- Herbert J Gans, 1969. "Planning for people, not buildings," Environment and Planning A, Pion Ltd, London, vol. 1(1), pages 33-46, January.
- Charles P. Himmelberg & Christopher J. Mayer & Todd Sinai, 2005.
"Assessing high house prices: bubbles, fundamentals, and misperceptions,"
218, Federal Reserve Bank of New York.
- Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
- Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions," NBER Working Papers 11643, National Bureau of Economic Research, Inc.
- Field, Alexander James, 1992. "Uncontrolled Land Development and the Duration of the Depression in the United States," The Journal of Economic History, Cambridge University Press, vol. 52(04), pages 785-805, December.
- Alan L. Olmstead & Paul W. Rhode, 2002.
"The Red Queen and the Hard Reds: Productivity Growth in American Wheat, 1800-1940,"
NBER Working Papers
8863, National Bureau of Economic Research, Inc.
- Olmstead, Alan L. & Rhode, Paul W., 2002. "The Red Queen and the Hard Reds: Productivity Growth in American Wheat, 1800 1940," The Journal of Economic History, Cambridge University Press, vol. 62(04), pages 929-966, December.
- Robert J. Shiller, 2007.
"Historic Turning Points in Real Estate,"
Cowles Foundation Discussion Papers
1610, Cowles Foundation for Research in Economics, Yale University.
- repec:oup:qjecon:v:114:y:1999:i:2:p:577-599 is not listed on IDEAS
- Alston Lee J. & Grove Wayne A. & Wheelock David C., 1994. "Why Do Banks Fail? Evidence from the 1920s," Explorations in Economic History, Elsevier, vol. 31(4), pages 409-431, October.
- Jackson, Jerry R., 1979. "Intraurban variation in the price of housing," Journal of Urban Economics, Elsevier, vol. 6(4), pages 464-479, October.
- Peter L. Rousseau, 2000.
"Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837,"
NBER Working Papers
7528, National Bureau of Economic Research, Inc.
- Rousseau, Peter L., 2002. "Jacksonian Monetary Policy, Specie Flows, And The Panic Of 1837," The Journal of Economic History, Cambridge University Press, vol. 62(02), pages 457-488, June.
- Peter L. Rousseau, 2000. "Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837," Vanderbilt University Department of Economics Working Papers 0004, Vanderbilt University Department of Economics, revised Jun 2001.
- repec:oup:qjecon:v:99:y:1984:i:4:p:729-52 is not listed on IDEAS
- Harding, John P. & Rosenthal, Stuart S. & Sirmans, C.F., 2007. "Depreciation of housing capital, maintenance, and house price inflation: Estimates from a repeat sales model," Journal of Urban Economics, Elsevier, vol. 61(2), pages 193-217, March.
- Albert Saiz, 2003. "Room in the Kitchen for the Melting Pot: Immigration and Rental Prices," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 502-521, August.
- Farley Grubb, 2009. "Land Policy: Founding Choices and Outcomes, 1781-1802," NBER Working Papers 15028, National Bureau of Economic Research, Inc.
- Polinsky, A Mitchell & Ellwood, David T, 1979. "An Empirical Reconciliation of Micro and Grouped Estimates of the Demand for Housing," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 199-205, May.
- repec:oup:qjecon:v:122:y:2007:i:2:p:775-805 is not listed on IDEAS
- Harley, C. Knick, 1978. "Western Settlement and the Price of Wheat, 1872–1913," The Journal of Economic History, Cambridge University Press, vol. 38(04), pages 865-878, December.
- Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:103:y:2013:i:3:p:1-42. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)or (Michael P. Albert)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.