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After the Fall: An Ex Post Characterization of Housing Price Declines Across Metropolitan Areas

Author Info

Listed author(s):
  • Carson, Richard T
  • Dastrup, Samuel R.

Abstract

Housing prices have plummeted across the United States. This paper examines differences in the magnitude of housing price decreases across metropolitan areas. A relatively small number of housing market variables observable before the fall are capable of explaining over 70% of the considerable variation in price declines. An additional nonparametric analysis suggests that exceeding particular thresholds for some of the key predictors is associated with much larger price drops. These findings are consistent with historical price patterns and raise questions about the validity of mortgage pricing and risk diversification norms in the US. The analysis points to a set of stylized facts concerning the housing price bubble that need to be explained and suggests fruitful hypotheses for understanding the dramatic housing price declines.

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Paper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number qt7ng9d927.

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Date of creation: 03 Dec 2009
Handle: RePEc:cdl:ucsdec:qt7ng9d927
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Keywords: home price indices; housing bubble; Social and Behavioral Sciences;

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  1. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
  2. Albert Saiz, 2008. "On Local Housing Supply Elasticity," ERES eres2008_241, European Real Estate Society (ERES).
  3. Glaeser, Edward L. & Gyourko, Joseph & Saiz, Albert, 2008. "Housing supply and housing bubbles," Journal of Urban Economics, Elsevier, vol. 64(2), pages 198-217, September.
  4. Case, Karl E & Shiller, Robert J, 1989. "The Efficiency of the Market for Single-Family Homes," American Economic Review, American Economic Association, vol. 79(1), pages 125-137, March.
  5. Atif Mian & Amir Sufi, 2011. "House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 2132-2156, August.
  6. Austin Kelly, 2007. "Zero Down Payment Mortgage Default," Staff Working Papers 07-05, Federal Housing Finance Agency.
  7. Christopher J. Mayer & Karen Pence, 2008. "Subprime Mortgages: What, Where, and to Whom?," NBER Working Papers 14083, National Bureau of Economic Research, Inc.
  8. repec:arz:wpaper:eres2008-241 is not listed on IDEAS
  9. Jan K. Brueckner, 1990. "Growth Controls and Land Values in an Open City," Land Economics, University of Wisconsin Press, vol. 66(3), pages 237-248.
  10. Gabriel Stuart A. & Quigley John M. & Rosenthal Larry A., 2009. "The Mortgage Meltdown, the Economy, and Public Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(3), pages 1-17, March.
  11. Engle, Robert & Navarro, Peter & Carson, Richard, 1992. "On the theory of growth controls," Journal of Urban Economics, Elsevier, vol. 32(3), pages 269-283, November.
  12. Christopher J. Mayer & Karen M. Pence, 2008. "Subprime mortgages: what, where, and to whom?," Finance and Economics Discussion Series 2008-29, Board of Governors of the Federal Reserve System (U.S.).
  13. William Goetzmann & Liang Peng & Jacqueline Yen, 2012. "The Subprime Crisis and House Price Appreciation," The Journal of Real Estate Finance and Economics, Springer, vol. 44(1), pages 36-66, January.
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