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Abstract for:

Housing Markets and the Financial Crisis of 2007-2009: Lessons for the Future

John V.  Duca,  John  Muellbauer,  Anthony  Murphy,  April 2010
Paper No' SERCDP0049: | Full paper (pdf)
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Keywords: financial crisis; house prices, credit crunch, subprime mortgages

JEL Classification: R21; G18; E51; E21; C51; C52

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
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An unsustainable weakening of credit standards induced a US mortgage and housing bubble whose consumption impact was amplified by innovations altering the collateral role of housing. In countries with more stable credit standards, any overshooting of construction and house prices owed more to traditional housing supply and demand factors. Housing collateral effects on consumption varied, depending on the liquidity of housing wealth. Lessons include recognizing the importance of financial innovation, regulation, housing policies, and global financial imbalances for fueling credit, construction, house price and consumption cycles that vary across countries.