The Supply Side of the Housing Boom and Bust of the 2000s
Chapter in NBER book Housing and the Financial Crisis (2013), Edward L. Glaeser and Todd Sinai, editors (p. 69 - 104)
This chapter focuses on supply side developments in the housing market. It addresses four key issues. First, how much excess housing production occurred during the boom phase of the cycle and how far along is the correction? Second, it considers trends in the characteristics of new single-family homes built prior to, during, and after the construction boom to assess what effect, if any, the boom may have had on those trends. The third question is how the home-building industry changed as prices boomed during the 2000s. Finally, it addresses the question of whether these large developers reaped excess profits from the boom, or whether excess demand simply drove up land values in specific markets, enriching landowners.
This paper was revised on April 9, 2015
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