Arrested Development: Theory and Evidence of Supply‐Side Speculation in the Housing Market

Arrested Development: Theory and Evidence of Supply‐Side Speculation in the Housing Market

  • CHARLES G. NATHANSON
  • ERIC ZWICK

Article first published online: 29th August 2018 DOI: 10.1111/jofi.12719

Abstract


This paper studies the role of disagreement in amplifying housing cycles. Speculation is easier in the land market than in the housing market due to frictions that make renting less efficient than owner‐occupancy. As a result, undeveloped land facilitates construction and intensifies the speculation that causes booms and busts in house prices. This observation challenges the standard intuition that in cities where construction is easier, house price booms are smaller. It can also explain why the largest house price booms in the United States between 2000 and 2006 occurred in areas with elastic housing supply.

Sign in to access the full article.

Related articles


MISCELLANEA

Article first published online: 29th November 2018 / DOI: 10.1111/jofi.12574

Read Article

ANNOUNCEMENTS

Article first published online: 29th November 2018 / DOI: 10.1111/jofi.12575

Read Article

AFA 2019 ATLANTA MEETINGS SEVENTY‐NINTH ANNUAL MEETING AMERICAN FINANCE ASSOCIATION Atlanta, Georgia

Article first published online: 29th November 2018 / DOI: 10.1111/jofi.12576

Read Article

ISSUE INFORMATION FM

Article first published online: 29th November 2018 / DOI: 10.1111/jofi.12577

Read Article

ISSUE INFORMATION BM

Article first published online: 29th November 2018 / DOI: 10.1111/jofi.12578

Read Article

Participant Schedule Report Participants in the AFA 2019 Atlanta Meetings January 4–6, 2019

Article first published online: 29th November 2018 / DOI: 10.1111/jofi.12741

Read Article

Are you an Author?


Please read our submission requirements and find out how to submit your paper to the Journal of Finance

Submit a paper