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Housing and the Financial Crisis$
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Edward L. Glaeser and Todd Sinai

Print publication date: 2013

Print ISBN-13: 9780226030586

Published to Chicago Scholarship Online: January 2014

DOI: 10.7208/chicago/9780226030616.001.0001

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Can Cheap Credit Explain the Housing Boom?

Can Cheap Credit Explain the Housing Boom?

(p.301) 7 Can Cheap Credit Explain the Housing Boom?
Housing and the Financial Crisis

Edward L. Glaeser

Joshua D. Gottlieb

Joseph Gyourko

University of Chicago Press

This chapter examines the impact of interest rates on housing prices. It suggests that the impact of interest rates may be weaker than has been traditionally suggested by the asset market approach to house prices. Interest rates fail to adequately explain the great housing market fluctuations between 1996 and 2010. Over the long 1996 to 2006 boom, they cannot account for more than one-fifth of the rise in house prices. There is also no evidence that approval rates or down payment requirements can explain most or all of the movement in house prices.

Keywords:   asset market, housing market, interest rates, house prices

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