Low interest rates didn’t cause the bubble, economists say

Everybody knows what caused the housing bubble, with its breathtaking, though ephemeral, increase in prices, right? A long run of low mortgage interest rates, loose lending and low (to nonexistent) downpayment requirements are the usual culprits cited by experts. But those factors can be blamed for only a small part of the bubble, according to research published this week by economists Edward Glaeser and Joshua Gottlieb of Harvard University and Joseph Gyourko of the Wharton School at the University of Pennsylvania. They write: “It isn’t that low interest rates don’t boost housing prices. They do.”

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3d rendering of a row of luxury townhouses along a street

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