Like many other assets, housing prices are quite volatile relative to observable changes in fundamentals. If we are going to understand boom-bust housing cycles, we must incorporate housing supply. In this paper, we present a simple model of housing bubbles that predicts that places with more...

The volatility of house prices and construction levels is high. Both exhibit strong positive serial correlations at 1-year frequencies, Prices show strong mean reversion over 5-year periods. This paper asks whether these facts can be reconciled in a dynamic housing model, where in the tradition...

Economists and politicians have eagerly proposed policies aimed at stopping the decline in housing prices. The government can't and shouldn't be trying to stop price declines, according to Edward Glaeser of Harvard and Joseph Gyourko of Wharton.

In this essay, we review the basic economics of housing supply and the functioning of US housing markets to better understand the distribution of home prices, household wealth and the spatial distribution of people across markets. We employ a cost-based approach to gauge whether a housing market...

Does America face an affordable housing crisis and, if so, why? This paper argues that in much of America the price of housing is quite close to the marginal, physical costs of new construction. The price of housing is significantly higher than construction costs only in a limited number of...

Between 1996 and 2006, real housing prices rose by 53 percent according to the Federal Housing Finance Agency price index. One explanation of this boom is that it was caused by easy credit in the form of low real interest rates, high loan-to-value levels and permissive mortgage approvals. We...

Since 1950, housing prices have risen regularly by almost two percent per year. Between 1950 and 1970, this increase reflects rising housing quality and construction costs. Since 1970, this increase reflects the increasing difficulty of obtaining regulatory approval for building new homes. In...