24 Pages Posted: 22 Aug 2012 Last revised: 17 Jul 2013
Date Written: February 14, 2013
Asset bubbles come and go. Only the housing bubble, however, brought the economy to its knees. Why? What makes housing uniquely a cause of macroeconomic risk?
This article examines the workings of the housing market as well as theories and empirical evidence about the housing bubble. It explains why housing is a particular source of macroeconomic risk and how changes in the housing finance channel were the critical element in the formation of the bubble.
Keywords: bubble, mortgage, housing, interest rates, securitization, agency, CDO
JEL Classification: E32, E44, G21, R31
Suggested Citation: Suggested Citation
Levitin, Adam J. and Wachter, Susan M., Why Housing? (February 14, 2013). Housing Policy Debate, Vol. 23, pp. 5-27 (2013); U of Penn, Inst for Law & Econ Research Paper No. 12-28; Georgetown Law and Economics Research Paper No. 12-035; Georgetown Public Law Research Paper No. 12-127. Available at SSRN: https://ssrn.com/abstract=2114620 or http://dx.doi.org/10.2139/ssrn.2114620
By Alan White
By Adam Levitin