Bubble, Bubble, Toil, and Trouble

20 Pages Posted: 9 Feb 2007

See all articles by Cabray Haines

Cabray Haines

Federal Reserve Bank of Chicago

Richard J. Rosen

Federal Reserve Bank of Chicago - Economic Research

Abstract

The rapid rise of real estate prices in recent years has led to fears of a housing price bubble. But, to determine whether there has been a bubble - and whether the bubble is bursting - one needs to know what home prices should be. The authors estimate a simple model of home prices and find that prices were, on average, above their predicted levels during 2000-2006. However, this result does not hold true uniformly across the country. To the extent that prices were overheating, this was happening largely in markets that have traditionally exhibited volatile prices.

Keywords: housing, bubble, home prices, real estate, Housing Demand, Housing Supply and Markets

Suggested Citation

Haines, Cabray and Rosen, Richard J., Bubble, Bubble, Toil, and Trouble. Economic Perspectives, Vol. 31, No. 1, 2007, Available at SSRN: https://ssrn.com/abstract=962371

Cabray Haines

Federal Reserve Bank of Chicago

230 South LaSalle Street
Chicago, IL 60604
United States

Richard J. Rosen (Contact Author)

Federal Reserve Bank of Chicago - Economic Research ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-6368 (Phone)
312-294-6262 (Fax)

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