NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Can Cheap Credit Explain the Housing Boom?

Edward L. Glaeser, Joshua D. Gottlieb, Joseph Gyourko

Chapter in NBER book Housing and the Financial Crisis (2013), Edward L. Glaeser and Todd Sinai, editors (p. 301 - 359)
Conference held November 17-18, 2011
Published in August 2013 by University of Chicago Press
© 2013 by the National Bureau of Economic Research

This chapter examines the impact of interest rates on housing prices. It suggests that the impact of interest rates may be weaker than has been traditionally suggested by the asset market approach to house prices. Interest rates fail to adequately explain the great housing market fluctuations between 1996 and 2010. Over the long 1996 to 2006 boom, they cannot account for more than one-fifth of the rise in house prices. There is also no evidence that approval rates or down payment requirements can explain most or all of the movement in house prices.

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This paper was revised on August 8, 2012

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This chapter first appeared as NBER working paper w16230, Can Cheap Credit Explain the Housing Boom?, Edward L. Glaeser, Joshua D. Gottlieb, Joseph Gyourko
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