Sand States and the US Housing Crisis
56 Pages Posted: 31 Dec 2013 Last revised: 13 Apr 2016
There are 2 versions of this paper
Sand States and the US Housing Crisis
When Real Estate is the Only Game in Town
Date Written: April 11, 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
JEL Classification: G1, G11, R2
Suggested Citation: Suggested Citation