Detecting Imbalances in House Prices: What Goes Up Must Come Down?

摘要

I suggest a toolkit of four bubble-detection methods that can be used to monitor developments in house prices. These methods are applied to US, Finnish, and Norwegian data. For the United States, all measures unanimously suggest a bubble in the early to mid-2000s, whereas current US house prices are found to be aligned with economic fundamentals. One of the measures indicates imbalances in Finland, while there are no signs of a bubble in Norway. I find that large parts of the US house price bubble can be explained by the sharp increase in capital inflows and the extension of loans to the subprime mortgage market.