TY  - JOUR
AU  - Capozza,Dennis R.
AU  - Seguin,Paul J.
TI  - Expectations, Efficiency, and Euphoria in the Housing Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5179
PY  - 1995
Y2  - July 1995
UR  - http://www.nber.org/papers/w5179
L1  - http://www.nber.org/papers/w5179.pdf
AB  - This paper studies expectations of capital appreciation in the housing market.  We show that expectations impounded in the rent/price ratio at the beginning of the decade successfully predict appreciation rates, but only if we first control for cross-sectional differences in the quality of rental versus owner-occupied housing.  We also demonstrate that observed rent/price ratios contain a disequilibrium component that also has power to forecast subsequent appreciation rates.  Finally, we provide evidence consistent with euphoria: participants in housing markets appear to overreact to income growth.
ER  -