Alternative Title
When real estate is the only game in town
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.
External URL
https://ssrn.com/abstract=2373179