Endogenous Formation and Collapse Of Housing Bubbles
This paper develops an analytical framework and an agent-based spatial model of the housing market. We show that low down payment requirement will cause housing bubbles. With low down payment requirement, a small decrease in the housing price will cause mortgage rate to rise in response to the lowering value of collateral . The rising mortgage rate will further suppress demand and turn the market into a downward spiral. The agent-base model is based on our interviews with local real estate agents. The exploratory work in this paper will help us better understand the housing market, give policy advice, and eventually prevent another damaging housing bubble.
|Date of creation:||08 Jul 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
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.:
- Glaeser, Edward & Saiz, Albert & Gyourko, Joseph, 2008.
"Housing Supply and Housing Bubbles,"
2962640, Harvard University Department of Economics.
- Christopher Mayer, 2011. "Housing Bubbles: A Survey," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 559-577, 09.
- Sheri Markose & Simone Giansante & Mateusz Gatkowski & Ali Rais Shaghaghi, 2010.
"Too Interconnected To Fail: Financial Contagion and Systemic Risk In Network Model of CDS and Other Credit Enhancement Obligations of US Banks,"
- Sheri Markose & Simone Giansante & Mateusz Gatkowski & Ali Rais Shaghaghi, 2010. "Too Interconnected To Fail: Financial Contagion and Systemic Risk in Network Model of CDS and Other Credit Enhancement Obligations of US Banks," Economics Discussion Papers 683, University of Essex, Department of Economics.
- Goodman, Allen C. & Thibodeau, Thomas G., 2008. "Where are the speculative bubbles in US housing markets?," Journal of Housing Economics, Elsevier, vol. 17(2), pages 117-137, June.
- Mary Riddel, 2011. "Are Housing Bubbles Contagious? A Case Study of Las Vegas and Los Angeles Home Prices," Land Economics, University of Wisconsin Press, vol. 87(1), pages 126-144.
- Jan K. Brueckner & Paul S. Calem & Leonard I. Nakamura, 2011.
"Subprime mortgages and the housing bubble,"
11-12, Federal Reserve Bank of Philadelphia.
- John Geanakoplos, 2009. "The Leverage Cycle," Cowles Foundation Discussion Papers 1715, Cowles Foundation for Research in Economics, Yale University.
- William N. Goetzmann & Liang Peng & Jacqueline Yen, 2009.
"The Subprime Crisis and House Price Appreciation,"
NBER Working Papers
15334, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:isu:genres:36277. 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: (Stephanie Bridges)The email address of this maintainer does not seem to be valid anymore. Please ask Stephanie Bridges to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.