Bubbles, Post-Crash Dynamics, and the Housing Market
| dc.contributor.author | Liu, Crocker H. | |
| dc.contributor.author | Nowak, Adam | |
| dc.contributor.author | Rosenthal, Stuart | |
| dc.date.accessioned | 2020-09-09T16:33:36Z | |
| dc.date.available | 2020-09-09T16:33:36Z | |
| dc.date.issued | 2014-01-10 | |
| dc.description.abstract | This paper documents and explains previously unrecognized post-crash dynamics following the collapse of a housing market bubble. Although home prices in Phoenix doubled 2004-2006, the relative price of small-to-large homes remained strikingly constant. That changed following the crash when small-home relative prices fell up to 80 percent. We argue that post-crash exit of speculative developers allowed relative prices to diverge while differences in demand elasticities and turnover associated with job loss pushed small-home values down relative to large homes. As speculative developers return relative prices should revert back to pre-boom levels, consistent with mean reversion that began in 2011. The implied post-crash mispricing of homes can be mitigated if cities publish size-stratified home price indexes. | |
| dc.description.legacydownloads | 2014_Liu_Bubbles.pdf: 356 downloads, before Aug. 1, 2020. | |
| dc.identifier.other | 7351167 | |
| dc.identifier.uri | https://hdl.handle.net/1813/70914 | |
| dc.language.iso | en_US | |
| dc.rights | Required Publisher Statement: © Cornell University. This report may not be reproduced or distributed without the express permission of the publisher. | |
| dc.subject | Cornell | |
| dc.subject | housing market | |
| dc.subject | home price indexes | |
| dc.subject | bubbles | |
| dc.title | Bubbles, Post-Crash Dynamics, and the Housing Market | |
| dc.type | article | |
| local.authorAffiliation | Liu, Crocker H.: chl62@cornell.edu Cornell University | |
| local.authorAffiliation | Nowak, Adam: University of West Virginia | |
| local.authorAffiliation | Rosenthal, Stuart: Syracuse University |
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