Understanding Recent Trends in House Prices and Home Ownership

Shiller, Robert J.

Understanding Recent Trends in House Prices and Home Ownership

Cowles Foundation Discussion Paper No. 1630

Yale Economics Department Working Paper No. 28

Yale ICF Working Paper No. 07-16

47 Pages Posted: 27 Sep 2007 Last revised: 2 Nov 2007

Robert J. Shiller

Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance

There are 2 versions of this paper

Date Written: September 14, 2007

Abstract

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.

Keywords: home ownership, housing prices, UK housing, US housing

JEL Classification: R21

Suggested Citation: Suggested Citation

Shiller, Robert J., Understanding Recent Trends in House Prices and Home Ownership (September 14, 2007). Cowles Foundation Discussion Paper No. 1630; Yale Economics Department Working Paper No. 28; Yale ICF Working Paper No. 07-16. Available at SSRN: https://ssrn.com/abstract=1017546