An Analysis of the Housing Market and the Oklahoma Experience

Recently housing price hikes are spreading across America spatially, a reminder of the stock market hikes of the 1990s that ruptured in 2000. The aim of this study were to identify the determinants of housing prices, the differences between housing and stock markets, and whether the housing market can follow the path of the stock market. The aim was also to examine the existence of a housing bubble in the housing market. The findings suggest that the rising gap between the cost of owning and renting, and rising price-income ratios are alarming for possible existence of a housing bubble in some markets. In Oklahoma County the number of housing foreclosures has been rising since 2000, another indication of a bubble in that market. The findings imply that while there are housing price hikes in some hot markets that resemble bubbles there is not a general national bubble, at least not yet. The severity of a housing crash depends on the future state of the economy, the timing of economic slowdown, and also interest rates.