Understanding Recent Trends in House Prices and Home Ownership
Robert J. Shiller
Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance
September 14, 2007
Cowles Foundation Discussion Paper No. 1630
Yale Economics Department Working Paper No. 28
Yale ICF Working Paper No. 07-16
This paper looks at a broad array of evidence concerning the recent boom in home prices, and considers what this means for future home prices and the economy. It does not appear possible to explain the boom in terms of fundamentals such as rents or construction costs. A psychological theory, that represents the boom as taking place because of a feedback mechanism or social epidemic that encourages a view of housing as an important investment opportunity, fits the evidence better. Three case studies of past booms are considered for comparison: the US housing boom of 1950, the US farmland boom of the 1970s, and the temporary interruption 2004-5 of the UK housing boom.
Number of Pages in PDF File: 47
Keywords: home ownership, housing prices, UK housing, US housing
JEL Classification: R21
Date posted: September 27, 2007 ; Last revised: November 2, 2007
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