Is There a Bubble in the Housing Market Now?

NFI Policy Brief No. 2005-PB-01

34 Pages Posted: 12 Aug 2006

See all articles by Jonathan McCarthy

Jonathan McCarthy

Federal Reserve Bank of New York - Research Department

Richard W. Peach

Federal Reserve Bank of New York

Date Written: October 2005

Abstract

Real home prices have been rising strongly since the mid-1990s, and have continued to do so even as the economy has weakened. This has sparked the concern as to whether there is a bubble in the housing market, the collapse of which could harm the overall economy. Taking into account fundamentals - including more appropriate price indices and interest rates - aggregate home prices are relatively high but not yet out of line. Home prices in some areas still may be set for a fall; however, prices in these areas typically have been volatile. Previous large home value declines in these areas have not had a sizable negative effect on the aggregate economy.

Keywords: housing bubble, home price indexes

Suggested Citation

McCarthy, Jonathan and Peach, Richard W., Is There a Bubble in the Housing Market Now? (October 2005). Available at SSRN: https://ssrn.com/abstract=923867 or http://dx.doi.org/10.2139/ssrn.923867

Jonathan McCarthy (Contact Author)

Federal Reserve Bank of New York - Research Department ( email )

33 Liberty Street
New York, NY 10045
United States
(212) 720-5645 (Phone)
(212) 720-1844 (Fax)

Richard W. Peach

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
528
rank
49,705
Abstract Views
3,662
PlumX Metrics