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Is there a real-estate bubble in the US?

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  • Zhou, Wei-Xing
  • Sornette, Didier

Abstract

Using a methodology developed in previous papers, we analyze the quarterly average sale prices of new houses sold in the USA as a whole, in the Northeast, Midwest, South, and West of the USA, in each of the 50 states and the District of Columbia of the USA, to determine whether they have grown at a faster-than-exponential rate which we take as the diagnostic of a bubble. We find that 22 states (mostly Northeast and West) exhibit clear-cut signatures of a fast-growing bubble. From the analysis of the S&P 500 Home Index, we conclude that the turning point of the bubble will probably occur around mid-2006.

Suggested Citation

  • Zhou, Wei-Xing & Sornette, Didier, 2006. "Is there a real-estate bubble in the US?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 361(1), pages 297-308.
    • Handle: RePEc:eee:phsmap:v:361:y:2006:i:1:p:297-308
    DOI: 10.1016/j.physa.2005.06.098
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    References listed on IDEAS

    as
    1. D. Sornette & A. Johansen, 2001. "Significance of log-periodic precursors to financial crashes," Papers cond-mat/0106520, arXiv.org.
    2. Didier Sornette & Wei-Xing Zhou, 2002. "The US 2000-2002 market descent: How much longer and deeper?," Quantitative Finance, Taylor & Francis Journals, vol. 2(6), pages 468-481.
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