Economic environment - housing bubbles: no national bubble, some regions vulnerable

Abstract

Since 2001, a combination of low mortgage rates and "boring" equity markets have helped to fuel record-setting home sales, contributing to substantial price increases in the U.S. and many other parts of the world (see Table 1). Economists are concerned about riskier mortgage financing and the increasing incidence of speculative demand in some regions. According to the National Association of Realtors (NAR), 23 percent of all home sales in 2004 were for investments (not owner occupied), and another 13 percent were bought as second homes. In this article, we will analyze housing bubbles - how they are defined, why they happen, and their implications for the economy. No one knows for sure if we are currently in the midst of a housing bubble (or boom), but we will provide you with some tools to analyze the situation.

Citation

Schuler, Al. 2005. Economic environment - housing bubbles: no national bubble, some regions vulnerable. Structural Building Components Magazine 20-25