Speculative bubbles or market fundamentals? An investigation of US regional housing markets

Shuping Shi*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

50 Citations (Scopus)


This paper investigates the existence of speculative bubbles in the US national and 21 regional housing markets over three decades (1978-2015). A new method for real-time monitoring exuberance in housing markets is proposed. By taking changes in the macroeconomic conditions (such as interest rate, per-capita income, employment, and population growth) into consideration, the new method provides better control for housing market fundamentals and thereby it is expected to significantly reduce the chance of false positive identification. Compared with the method of Phillips et al. (2015a, 2015b), the new approach finds a dramatic reduction in the number of speculative housing markets and shorter bubble episodes in the US. It locates only one bubble episode in the early-to-mid 2000s over the whole sample period in the national housing market. At the regional level, it identifies two periods of speculation: late 1980s and early-to-mid 2000s. The early-to-mid 2000s bubble episode lasts longer and involves 16 metropolitan statistical areas.

Original languageEnglish
Pages (from-to)101-111
Number of pages11
JournalEconomic Modelling
Early online date20 Jun 2017
Publication statusPublished - Nov 2017


  • Fundamentals
  • Housing market
  • Macroeconomic conditions
  • Regional
  • Speculative bubbles


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