NBER Working Papers and Publications
|July 2014||The 1920s American Real Estate Boom and the Downturn of the Great Depression: Evidence from City Cross-Sections|
with Christopher Hanes
in Housing and Mortgage Markets in Historical Perspective, Eugene N. White, Kenneth Snowden, and Price Fishback, editors
Looking back on the real estate boom of the 1920s, economists have grappled with two questions: did it contribute to the depth of the Great Depression, and was it the result of an irrational "bubble" in residential real estate? This chapter examines cross-sectional data on residential construction, house prices and other variables across American cities in the 1920s and the downturn of the Great Depression, finding that cities which had experienced the biggest house construction booms in the mid-1920s, and the highest increases in house values and homeownership rates across the 1920s, saw the greatest declines in house values and homeownership rates after 1930. They also experienced the highest rates of mortgage foreclosure in the early 1930s. These patterns look very much like those aroun...
|February 2013||The 1920s American Real Estate Boom and the Downturn of the Great Depression: Evidence from City Cross Sections|
with Christopher Hanes: w18852
In the 1929-1933 downturn of the Great Depression, house values and homeownership rates fell more, and mortgage foreclosure rates were higher, in cities that had experienced relatively high rates of house construction in the residential real-estate boom of the mid-1920s. Across the 1920s, boom cities had seen the biggest increases in house values and homeownership rates. These patterns suggest that the mid-1920s boom contributed to the depth of the Great Depression through wealth and financial effects of falling house values. Also, they are very similar to cross-sectional patterns across metro areas around 2006.