by Mark Thoma, University of Oregon (Department of Economics)

Visit Economist's View

Housing Supply and Housing Bubbles

Posted on July 26, 2008

Edward Glaeser, Joseph Gyourko, and Albert Saiz construct a model of housing bubbles that is consistent with movements in housing prices and quantities during the two most recent housing bubbles (the current episode and the prior episode in the 1980s). Looking at the data, they note that areas with inelastic housing supply had large price run-ups and subsequent long, drawn out crashes in both episodes. However, The fact that highly elastic places had price booms is one of the strange facts about the recent price explosion. Because it is unprecedented, there is considerable uncertainty about ...

Original article link


housing bubble , interest rates