TY  - JOUR
AU  - Goetzmann,William N.
AU  - Newman,Frank
TI  - Securitization in the 1920's
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15650
PY  - 2010
Y2  - January 2010
UR  - http://www.nber.org/papers/w15650
L1  - http://www.nber.org/papers/w15650.pdf
N1  - Author contact info:
William N. Goetzmann
School of Management
Yale University
Box 208200
New Haven, CT 06520-8200
Tel: 203/432-5950
Fax: 203/432-3003
E-Mail: william.goetzmann@yale.edu

Frank Newman
Yale University
135 Prospect Street
New Haven, CT 06520
E-Mail: frank.e.newman@gmail.com
AB  - This paper quantifies the scale and scope of the commercial real estate mortgage bond market in the period surrounding the 1920s in an attempt to better understand the role of retail mortgage debt in early urban development.  In particular, this paper quantifies the size of the market, identifies risk factors affecting the coupon yield spread over Treasuries and utilizes a unique data set to construct a commercial mortgage price index over the period 1926-1935.

A substantial retail appetite for real estate securities during this period may have significantly contributed to a real construction boom, but overly optimistic speculation in these securities may have led to overbuilding.  The rapid deterioration of these securities and a near complete drop in issuance show, ex post, that investors were overconfident in building fundamentals during the boom years.  The breakdown in the value of real estate securities as collateral assets preceded the crash of 1929 and may have contributed to the fall of asset prices more generally.
ER  -