Asset bubbles come and go. Only the housing bubble, however, brought the economy to its knees. Why? What makes housing uniquely a cause of macroeconomic risk? This article examines the workings of the housing market as well as theories and empirical evidence about the housing bubble. It explains why housing is a particular source of macroeconomic risk and how changes in the housing finance channel were the critical element in the formation of the bubble.
No takes yet. Share an insight, caveat, or question.
Levitin et al. (2013) studied this question.
Synapse has enriched 3 closely related papers on similar clinical questions. Consider them for comparative context: