The subprime crisis and its role in the financial crisis
This paper discusses some of the key characteristics of the U.S. subprime mortgage boom and bust and discusses the causes, particularly related to the relationship between subprime mortgage defaults and housing prices. We observe that housing prices and mortgage defaults had distinctly localized trends, but those trends ceased by 2005 when several states studied in this paper (Arizona, California and Nevada) began to move together. Furthermore, we observe the seriously delinquent subprime mortgages increased much more rapidly than was anticipated by historically-based econometric models. As such, this paper offers a partial explanation for how financial institutions misunderstood the declining house prices and increasing subprime default.
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.:
- Brent Ambrose & Anthony Sanders, 2004. "Legal Restrictions in Personal Loan Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 30(2), pages 133-151, November.
- Edward E. Leamer, 2007.
"Housing IS the Business Cycle,"
NBER Working Papers
13428, National Bureau of Economic Research, Inc.
- Edward E. Leamer, 2007. "Housing is the business cycle," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 149-233.
- Christopher L. Foote & Kristopher Gerardi & Lorenz Goette & Paul S. Willen, 2008. "Subprime facts: what (we think) we know about the subprime crisis and what we don’t," Public Policy Discussion Paper 08-2, Federal Reserve Bank of Boston.
- Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005.
"Why Have Housing Prices Gone Up?,"
American Economic Review,
American Economic Association, vol. 95(2), pages 329-333, May.
- Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," Harvard Institute of Economic Research Working Papers 2061, Harvard - Institute of Economic Research.
- Edward L. Glaeser & Joseph Gyourko & Raven Saks, 2005. "Why Have Housing Prices Gone Up?," NBER Working Papers 11129, National Bureau of Economic Research, Inc.
- Patric H. Hendershott & John C. Weicher, 2002. "Forecasting Housing Markets: Lessons Learned," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(1), pages 1-11.
- Karen M. Pence, 2006. "Foreclosing on Opportunity: State Laws and Mortgage Credit," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 177-182, February.
- Yuliya Demyanyk & Otto Van Hemert, 2007. "Understanding the subprime mortgage crisis," Supervisory Policy Analysis Working Papers 2007-05, Federal Reserve Bank of St. Louis.
When requesting a correction, please mention this item's handle: RePEc:eee:jhouse:v:17:y:2008:i:4:p:254-261. 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: (Zhang, Lei)
If references are entirely missing, you can add them using this form.