A blog dedicated to tracking the continuing decline of housing markets throughout the USA. It is a long slow decline. But, decline it will. The speculative episode was simply unsustainable. With special attention to the Washington, DC area. Please join in the discussion.
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Dean Baker's View of the Housing Bubble
Posted on July 21, 2008
From a paper written in May by Dean Baker of the Center for Economic Policy Research:The housing bubble in the United States grew up alongside the stock bubble in the mid-90s....The stock wealth induced consumption boom also led people to buy bigger and/or better homes, since they sought to spend some of their new stock wealth on housing. This increase in demand had the effect of triggering a housing bubble because in the short-run the supply of housing is relatively fixed. Therefore an increase in demand leads first to an increase in price. As prices began to rise in the most affected areas, ...
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