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The 1989-92 Credit Crunch for Real Estate: A Retrospective

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  • James T. Fergus
  • John L. Goodman

Abstract

This study surveys a broad range of information to establish the degree to which real estate lending and construction activity decreased in the 1989-92 period owing to a "credit crunch." It reviews the conditions that led up to the contraction in mortgage lending and construction and then documents the extent to which the evidence is consistent with a credit crunch in lending for residential and nonresidential construction, permanent financing of income properties, and residential mortgage lending. Also, this study weighs the relative importance of the credit crunch and other factors that contributed to the falloff in real estate lending and contrasts the recent period with earlier credit crunch episodes. Copyright American Real Estate and Urban Economics Association.

Suggested Citation

  • James T. Fergus & John L. Goodman, 1994. "The 1989-92 Credit Crunch for Real Estate: A Retrospective," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(1), pages 5-32.
  • Handle: RePEc:bla:reesec:v:22:y:1994:i:1:p:5-32
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    References listed on IDEAS

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    1. Rosen, Harvey S., 1985. "Housing subsidies: Effects on housing decisions, efficiency, and equity," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 7, pages 375-420 Elsevier.
    2. Ermisch, John & Di Salvo, Pamela, 1997. "The Economic Determinants of Young People's Household Formation," Economica, London School of Economics and Political Science, vol. 64(256), pages 627-644, November.
    3. Masnick, George S., 2001. "The New Demographics of Housing," Berkeley Program on Housing and Urban Policy, Working Paper Series qt9668w1w4, Berkeley Program on Housing and Urban Policy.
    4. Boyes, William J. & Hoffman, Dennis L. & Low, Stuart A., 1989. "An econometric analysis of the bank credit scoring problem," Journal of Econometrics, Elsevier, pages 3-14.
    5. Haurin Donald R. & Hendershott Patric H. & Kim Dongwook, 1994. "Housing Decisions of American Youth," Journal of Urban Economics, Elsevier, vol. 35(1), pages 28-45, January.
    6. Ermisch, John, 1999. "Prices, Parents, and Young People's Household Formation," Journal of Urban Economics, Elsevier, vol. 45(1), pages 47-71, January.
    7. Haurin, Donald R & Hendershott, Patric H & Kim, Dongwook, 1993. "The Impact of Real Rents and Wages on Household Formation," The Review of Economics and Statistics, MIT Press, pages 284-293.
    8. Donald R. Haurin & R. Jean Haurin & Steven Garasky, 2001. "Group living decisions as youths transition to adulthood," Journal of Population Economics, Springer;European Society for Population Economics, pages 329-349.
    9. Borsch-Supan, Axel, 1986. "Household formation, housing prices, and public policy impacts," Journal of Public Economics, Elsevier, pages 145-164.
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    Cited by:

    1. Rena Sivitanidou, 1999. "Does the Theory of Irreversible Investments Help Explain Movements in Office-Commerical Construction?," Working Paper 8659, USC Lusk Center for Real Estate.

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