Sand states and the US housing crisis

Alternative Title

When real estate is the only game in town

Author

Hyunsoo CHOI, Singapore Management UniversityFollow
Harrison G. HONG
Jeffrey D. KUBIK
Jeffrey P. THOMPSON

Publication Type

Working Paper

Version

publishedVersion

Publication Date

4-2016

Abstract

The excesses of the historic US housing cycle of the 2000s were concentrated in the Metropolitan Statistical Areas (MSAs) of Arizona, California, Florida and Nevada. Even controlling for leading explanations of this housing cycle, these Sand State MSAs had more than double the mortgage originations, defaults and price fluctuations than other MSAs. We show that these excesses can be explained by Sand State MSAs having an abnormally low supply of publicly traded firms headquartered there relative to total income. Households in these MSAs are more likely to purchase investment homes nearby rather than stocks, amplifying the housing cycle there.

Keywords

Sand States, US Housing Crisis, Investment Homes, Local Bias, Household Portfolio

Discipline

Real Estate

Research Areas

Finance

First Page

1

Last Page

56

Citation

CHOI, Hyunsoo; HONG, Harrison G.; KUBIK, Jeffrey D.; and THOMPSON, Jeffrey P.. Sand states and the US housing crisis. (2016). 1-56.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5310

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.