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Housing Bubbles: A Survey

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  • Christopher Mayer

    () (Columbia Business School, Columbia University, New York, NY 10027; NBER, Cambridge, Massachusetts 02138; and Visiting Scholar, Federal Reserve Bank of New York, New York, NY 10005)

Abstract

The past 25 years have represented two periods of extreme movements in U.S. and global house prices that appear to be much larger than can be easily explained by changes in fundamentals. These episodes spurred research on housing bubbles that focused attention on the role of outsized expectations in excessive house price appreciation. By contrast, some economists pointed to alternative explanations for excess volatility, including liquidity constraints, lending cycles, search externalities, and zoning delays. Empirical work supports the role of these factors in explaining at least some of the cyclical variation of house prices and inventories of homes for sale. Existing research does not yet provide a crisp definition of a housing bubble nor does it allow researchers to predict where or when bubbles can occur.

Suggested Citation

  • Christopher Mayer, 2011. "Housing Bubbles: A Survey," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 559-577, September.
  • Handle: RePEc:anr:reveco:v:3:y:2011:p:559-577
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev.economics.012809.103822
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    More about this item

    Keywords

    housing cycles; housing market efficiency;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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