title: The Regime Shift Associated with the 2004-2008 US Housing Market Bubble.
abstract: The Subprime Bubble preceding the Subprime Crisis of 2008 was fueled by risky lending practices, manifesting in the form of a large abrupt increase in the proportion of subprime mortgages issued in the US. This event also coincided with critical slowing down signals associated with instability, which served as evidence of a regime shift or phase transition in the US housing market. Here, we show that the US housing market underwent a regime shift between alternate stable states consistent with the observed critical slowing down signals. We modeled this regime shift on a universal transition path and validated the model by estimating when the bubble burst. Additionally, this model reveals loose monetary policy to be a plausible cause of the phase transition, implying that the bubble might have been deflatable by a timely tightening of monetary policy.
authors: Interdisciplinary Graduate School, Nanyang Technological University, Singapore, Republic of Singapore.|Complexity Institute, Nanyang Technological University, Singapore, Republic of Singapore.
authors: James
authors: http://orcid.org/0000-0003-0721-6229
authors: J
authors: Tan
authors: Division of Physics and Applied Physics, School of Physical and Mathematical Sciences, Nanyang Technological University, Singapore, Republic of Singapore.|Complexity Institute, Nanyang Technological University, Singapore, Republic of Singapore.
authors: Siew Ann
authors: SA
authors: Cheong
mesh_terms: D049674:History, 21st Century; D006798:Housing; D014481:United States