We examine the use of simultaneous close junior lien lending (“piggybacks”) over the course of the recent housing bubble and subsequent mortgage market collapse. Using both state-level and zip code-level data over the period 2001-2008, we find that the fraction of piggyback originations is...

Our study investigates the role of speculation in real estate cycles. We find that even a simple model of lagged supply response to price changes and speculation is sufficient to generate real estate cycles. Second, the volatility of prices – the biggest purported downside of “speculation”...