Number: RL34244
Title: Would a Housing Crash Cause a Recession?
Authors: Marc Labonte, Government and Finance Division 
Abstract: After several years of unprecedented price appreciation, the housing boom has come to an end, and some economists believe that prices in many markets will experience a near-term decline. The housing boom has gripped the public's imagination in the current economic expansion, and many observers now wonder if a housing crash would cause an economic recession (a sustained period of sub-par economic growth and higher unemployment). This report will examine the channels through which changes in the housing market affect the economy, and what policy options might be used to offset its adverse effects. It will begin with a brief discussion of the housing boom and its aftermath.
Pages: 20
Date: November 7, 2007