The Interwar Housing Cycle in the Light of 2001-2011: A Comparative Historical Approach
NBER Working Paper No. 18796
This paper examines the interwar housing cycle in comparison to what transpired in the United States between 2001 and 2011. The 1920s experienced a boom in construction and prolonged retardation in building in the 1930s, resulting in a swing in residential construction’s share of GDP, and its absolute volume, that was larger than what has taken place in the 2000s. In contrast, there was relatively little sustained movement in the real price of housing between 1919 and 1941, and the up and down price movements were remarkably modest, certainly in comparison with more recent experience. The paper documents the higher degree of housing leverage in 2001-2011. And it documents a rate of foreclosure on residential housing post 2006 that is likely higher than during the 1930s. It concludes that balance sheet problems resulting from a prior residential housing boom pose greater obstacles to recovery today than they did in the interwar period.
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Forthcoming as The Interwar Housing Cycle in the Light of 2001-2012: A Comparative Historical Perspective, Alexander J. Field, in Housing and Mortgage Markets in Historical Perspective (2014), University of Chicago Press
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