Crashes in real estate prices: causes and predictability

Xiao, Qin

Abstract

Large swings in real estate prices that end in devastating crashes have been witnessed by many countries in the past two decades. To curtail the damage of these crashes, it is imperative that we understand their causes. This study proposes a model that associates market crashes with periodically collapsing speculative bubbles. Unlike the conventional literature, the identification of the bubble does not rely on assumptions about fundamentals, but on some 'fingerprints' of speculation. These fingerprints, theoretically, may also serve as predictors of market crashes. In practice, however, a number of factors may hinder the accuracy of the prediction. © 2010 Urban Studies Journal Limited.

• Journal Article Type: Article
• Publication Date: Jul 1, 2010
• Print ISSN: 0042-0980
• Electronic ISSN: 1360-063X
• Publisher: SAGE Publications
• Peer Reviewed: Peer Reviewed
• Volume: 47
• Issue: 8
• Pages: 1725-1744
• APA6 Citation: Xiao, Q. (2010). Crashes in real estate prices: causes and predictability. Urban studies, 47(8), 1725-1744. doi:10.1177/0042098009356482
• DOI: https://doi.org/10.1177/0042098009356482
• Keywords: Environmental Science (miscellaneous); Urban Studies
• Publisher URL: http://journals.sagepub.com/doi/10.1177/0042098009356482