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What Will it Take to Restore the Housing Market
| Content Provider | Semantic Scholar |
|---|---|
| Author | Wheaton, William L. C. Nechayev, Gleb |
| Copyright Year | 2009 |
| Abstract | This paper examines the causes of the run up in house prices between 1998 and 2006 and the subsequent fall. It is argued that two unique factors have been at work: a true "bubble" in 2nd homes, and a fundamental expansion and now contraction of mortgage credit availability. These "new" factors render traditional econometric forecasting relatively useless in judging where markets will go in the future. Instead the paper relies on theory - suggesting that a recovery in sales and an accompanying reduction in the for-sale inventory are both necessary and sufficient to restore price stability and then growth. The paper shows that the relationships between sales, prices and the inventory are complicated and reviews recent econometric evidence about them. A recovery in prices will require (1) renewed purchases of housing by 1st time buyers as well as investors, (2) several years more of record low construction, and (3) some form of amelioration or resolution of foreclosures. |
| File Format | PDF HTM / HTML |
| DOI | 10.2139/ssrn.1356243 |
| Alternate Webpage(s) | http://dspace.mit.edu/bitstream/handle/1721.1/64390/whatwillittaketo00whea.pdf?sequence=1 |
| Alternate Webpage(s) | http://economics.mit.edu/files/3782 |
| Alternate Webpage(s) | https://doi.org/10.2139/ssrn.1356243 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
