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Title:A simple model of a speculative housing market PDF Logo
Authors:Dieci, Roberto
Westerhoff, Frank
Issue Date:2009
Series/Report no.:BERG Working paper series on government and growth 62
Abstract:We develop a simple model of a speculative housing market in which the demand for houses is influenced by expectations about future housing prices. Guided by empirical evidence, agents rely on extrapolative and regressive forecasting rules to form their expectations. The relative importance of these competing views evolves over time, subject to market circumstances. As it turns out, the dynamics of our model is driven by a two-dimensional nonlinear map which may display irregular boom and bust housing price cycles, as repeatedly observed in many actual markets. However, we also find that speculation may be a source of both stability and instability.
Subjects:Housing markets
Speculation
Boom and bust cycles
Nonlinear Dynamics
JEL:G12
G14
G15
ISBN:978-3-931052-69-0
Document Type:Working Paper
Appears in Collections:BERG Working Paper Series, Universität Bamberg

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