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


  • James T. Fergus
  • John L. Goodman


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

    1. Joe Peek & Eric S. Rosengren, 1992. "The role of real estate in the New England credit crunch," Working Papers 92-4, Federal Reserve Bank of Boston.
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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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