A number of analysts tell us that the weak housing market has been the main impediment to stronger growth in the broader economy. One recent study advises simply that Housing Is The Business Cycle. Unfortunately, that relationship has only brought trouble in recent years, courtesy of a housing market that fell off a cliff and remained flat on its back. But thinking about residential real estate in something other than a deeply negative light is topical again this morning after reading today’s update on housing starts and newly issued building permits for November. Both series posted handsome gains on the month. Yes, we’ve been here before only to see the apparent rebound sputter out. But the latest rise is accompanied by something else we haven’t seen in a while: a rising trend over recent months. Could this be the long-awaited turning point for housing?
Daily Archives: December 20, 2011
Research Review | 12.20.2011 | Housing & The Business Cycle
How Long Do Housing Cycles Last? A Duration Analysis for 19 OECD Countries
Philippe Bracke (London School of Economics) | Oct. 2011
19 OECD countries. I provide two sets of results, one pertaining to the average length and the other to the length distribution. On average, upturns are longer than downturns, but the difference disappears once the last house price boom is excluded. In terms of length distribution, upturns (but not downturns) are more likely to end as their duration increases. This duration dependence is consistent with a boom-bust view of house price dynamics, where booms represent departures from fundamentals that are increasingly difficult to sustain.