Flips, Flops and Foreclosures: Anatomy of a Real Estate Bubble
32 Pages Posted: 14 Aug 2010 Last revised: 22 Oct 2010
Date Written: October 20, 2010
Abstract
This paper examines the anatomy of a real estate bubble. In the process, we identify three phases of the market’s evolution: in the first phase, a large percentage of transactions are speculative or “flips” causing prices to rapidly increase; in phase two, flipping loses its profitability; and in phase three, there is an increasing number of foreclosures leading to falling prices. An illustration of this anatomy is provided by the evolution of the Las Vegas metropolitan housing market from 1994 through 2009. The descriptive analysis of the Las Vegas market is augmented with causality tests which show that prices were the driving force behind all three phases in the market’s evolution.
Keywords: Flipping, Mortgages, Foreclosure, Speculation, Real Estate
JEL Classification: G11, G21, R31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Securitization and Distressed Loan Renegotiation: Evidence from the Subprime Mortgage Crisis
By Tomasz Piskorski, Amit Seru, ...
-
Why Don't Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures and Securitization
By Manuel Adelino, Kristopher Gerardi, ...
-
Recourse and Residential Mortgage Default: Evidence from U.S. States
By Andra C. Ghent and Marianna Kudlyak
-
Why Don't Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, and Securitization
By Manuel Adelino, Kristopher Gerardi, ...
-
Moral and Social Constraints to Strategic Default on Mortgages
By Luigi Guiso, Paola Sapienza, ...
-
Moral and Social Constraints to Strategic Default on Mortgages
By Luigi Guiso, Paola Sapienza, ...
-
Reducing Foreclosures: No Easy Answers
By Christopher L. Foote, Kristopher Gerardi, ...
-
Reducing Foreclosures: No Easy Answers
By Christopher L. Foote, Kristopher Gerardi, ...
-
An Empirical Model of Subprime Mortgage Default from 2000 to 2007
By Patrick Bajari, Chenghuan Sean Chu, ...