Understanding Recent Trends in House Prices and Home Ownership
This paper looks at a broad array of evidence concerning the recent boom in home prices, and considers what this means for future home prices and the economy. It does not appear possible to explain the boom in terms of fundamentals such as rents or construction costs. A psychological theory, that represents the boom as taking place because of a feedback mechanism or social epidemic that encourages a view of housing as an important investment opportunity, fits the evidence better.
An earlier version of this paper was presented at "Housing, Housing Finance, and Monetary Policy," an economic symposium sponsored by the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming, on August 31-September 1, 2007. The author is indebted to Tyler Ibbotson-Sindelar for research assistance, and, for suggestions and other help, to Harold Magnus Andreassen, Terry Loebs, William Smalley, and Ronit Walny. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Robert J. Shiller, 2007. "Understanding recent trends in house prices and homeownership," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 89-123. citation courtesy of