Working Paper: NBER ID: w18059
Authors: Todd M. Sinai
Abstract: This paper describes six stylized patterns among housing markets in the United States that potential explanations of the housing boom and bust should seek to explain. First, individual housing markets in the U.S. experienced considerable heterogeneity in the amplitudes of their cycles. Second, the areas with the biggest boom-bust cycles in the 2000s also had the largest boom-busts in the 1980s and 1990s, with a few telling exceptions. Third, the timing of the cycles differed across housing markets. Fourth, the largest booms and busts, and their timing, seem to be clustered geographically. Fifth, the cross sectional variance of annual house price changes rises in booms and declines in busts. Finally, these stylized facts are robust to controlling for housing demand fundamentals - namely, rents, incomes, or employment - although changes in fundamentals are correlated with changes in prices.
Keywords: Housing Markets; Boom-Bust Cycles; House Prices
JEL Codes: G12; R12; R21; R3; Y1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Market characteristics (D49) | Price dynamics (E30) |
| Historical market behavior (N21) | Current dynamics (C69) |
| Economic factors (P42) | House price cycles (E32) |
| Local economic conditions (R11) | Observed patterns (C90) |
| Broader economic conditions (E66) | Market dynamics (D49) |
| Demand fundamentals + Other factors (J23) | House price cycles (E32) |