Understanding Recent Trends in House Prices and Home Ownership
This paper looks at a broad array of evidence concerning the recent boom in home prices, and considers what this means for future home prices and the economy. It does not appear possible to explain the boom in terms of fundamentals such as rents or construction costs. A psychological theory, that represents the boom as taking place because of a feedback mechanism or social epidemic that encourages a view of housing as an important investment opportunity, fits the evidence better.
Published: Robert J. Shiller, 2007. "Understanding recent trends in house prices and homeownership," Proceedings, Federal Reserve Bank of Kansas City, pages 89-123.