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Book/Printed Material Can cheap credit explain the housing boom?

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Title

  • Can cheap credit explain the housing boom?

Summary

  • "Between 1996 and 2006, real housing prices rose by 53 percent according to the Federal Housing Finance Agency price index. One explanation of this boom is that it was caused by easy credit in the form of low real interest rates, high loan-to-value levels and permissive mortgage approvals. We revisit the standard user cost model of housing prices and conclude that the predicted impact of interest rates on prices is much lower once the model is generalized to include mean-reverting interest rates, mobility, prepayment, elastic housing supply, and credit-constrained home buyers. The modest predicted impact of interest rates on prices is in line with empirical estimates, and it suggests that lower real rates can explain only one-fifth of the rise in prices from 1996 to 2006. We also find no convincing evidence that changes in approval rates or loan-to-value levels can explain the bulk of the changes in house prices, but definitive judgments on those mechanisms cannot be made without better corrections for the endogeneity of borrowers' decisions to apply for mortgages"--National Bureau of Economic Research web site.

Names

  • Glaeser, Edward L. (Edward Ludwig), 1967-
  • Gottlieb, Joshua D.
  • Gyourko, Joseph E., 1956-
  • National Bureau of Economic Research

Created / Published

  • Cambridge, MA : National Bureau of Economic Research, c2010.

Notes

  • -  Title from PDF file as viewed on 9/2/2010.
  • -  Includes bibliographical references.
  • -  Also available in print.
  • -  Mode of access: World Wide Web.
  • -  System requirements: Adobe Acrobat Reader.

Call Number/Physical Location

  • HB1

Digital Id

Library of Congress Control Number

  • 2010656387

Access Advisory

  • Unrestricted online access

Online Format

  • image
  • pdf

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Cite This Item

Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

Glaeser, Edward L, Joshua D Gottlieb, Joseph E Gyourko, and National Bureau Of Economic Research. Can Cheap Credit Explain the Housing Boom?. Cambridge, MA: National Bureau of Economic Research, 2010. Pdf. https://aj.sunback.homes/item/2010656387/.

APA citation style:

Glaeser, E. L., Gottlieb, J. D., Gyourko, J. E. & National Bureau Of Economic Research. (2010) Can Cheap Credit Explain the Housing Boom?. Cambridge, MA: National Bureau of Economic Research. [Pdf] Retrieved from the Library of Congress, https://aj.sunback.homes/item/2010656387/.

MLA citation style:

Glaeser, Edward L, et al. Can Cheap Credit Explain the Housing Boom?. Cambridge, MA: National Bureau of Economic Research, 2010. Pdf. Retrieved from the Library of Congress, <aj.sunback.homes/item/2010656387/>.