NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Arrested Development: Theory and Evidence of Supply-Side Speculation in the Housing Market

Charles G. Nathanson, Eric Zwick

NBER Working Paper No. 23030
Issued in January 2017
NBER Program(s):Asset Pricing, Corporate Finance, Economic Fluctuations and Growth, Monetary Economics

This paper studies the role of disagreement in amplifying housing cycles. Speculation is easier in the land market than in the housing market due to frictions that make renting less efficient than owner-occupancy. As a result, undeveloped land both facilitates construction and intensifies the speculation that causes booms and busts in house prices. This observation reverses the standard intuition that cities where construction is easier experience smaller house price booms. It also explains why the largest house price booms in the United States between 2000 and 2006 occurred in areas with elastic housing supply.

download in pdf format
   (1619 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23030

Users who downloaded this paper also downloaded* these:
Faccio and Zingales w23041 Political Determinants of Competition in the Mobile Telecommunication Industry
Glaeser w22997 Real Estate Bubbles and Urban Development
Gyourko and Molloy w20536 Regulation and Housing Supply
Altonji and Zimmerman w23029 The Costs of and Net Returns to College Major
Cortazar, Millard, Ortega, and Schwartz w22991 Commodity Price Forecasts, Futures Prices and Pricing Models
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us