The 1920s American Real Estate Boom and the Downturn of the Great Depression: Evidence from City Cross Sections
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.
Thanks to Price Fishback, Kenneth Snowden and David Wheelock for comments and data, and to Eugene White and participants in the 2011 Cliometrics Conference for comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
The 1920s American Real Estate Boom and the Downturn of the Great Depression: Evidence from City Cross-Sections, Michael Brocker, Christopher Hanes. in Housing and Mortgage Markets in Historical Perspective, White, Snowden, and Fishback. 2014