A recent study confronts misperceptions about the underlying drivers behind the decade-old real estate boom and refutes conventional wisdom saying there is a housing bubble. Christopher Mayer, the Paul Milstein Professor of Real Estate; Charles Himmelberg of the Federal Reserve; and Todd Sinai from Wharton looked at 46 single-family housing markets from 1980 to 2004 and found that recent growth in house prices does not reflect a real estate bubble.
The study, “Assessing High House Prices: Bubbles, Fundamentals and Misperceptions,” finds that the run-up in housing prices is largely explained by such basic economic fundamentals as low interest rates, strong income growth among high-income Americans, and unusually low housing prices in the mid-1990s.
Prof. Mayer and his coauthors captured national attention with the work, penning an op-ed for the Wall Street Journal, appearing on national programs including CNBC and Bloomberg Television, and garnering mention in newspapers across the country.
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