August 10, 2021
THERE WAS JUST SECURITIES FRAUD:
In other words, it wasn't much of a real estate bubble (Tyler Cowen, August 10, 2021, Marginal Revolution)
We reevaluate the 2000s housing cycle from the perspective of 2020. National real house prices grew steadily between 2012 and 2019, with the largest price growth in the same areas that had the largest booms between 1997 and 2006 and busts between 2006 and 2012. As a result, the areas that had the largest booms also had higher long-run price growth over the entire 1997-2019 period. With "2020 hindsight," the 2000s housing cycle is not a boom-bust but rather a boom-bust-rebound.We argue that this pattern reflects a larger role for fundamentals than previously thought.As I see it, there was a "negative bubble" circa 2008-2009, based on panic about the shadow banking system that was at the time reasonable but also turned out to be wrong.
Folks, naturally, sought to blame the credit crunch on "unworthy" minority borrowers rather than on the white collar types who lied about the risk of loans in the packages they were selling.
Posted by Orrin Judd at August 10, 2021 12:00 AM