A paper presented by Margaret M. Jacobson in the Federal Reserve Board’s 2026 Finance and Economics Discussion Series (FEDS) reports that expected capital gains were higher for lower‑priced houses than for higher‑priced houses in several metropolitan statistical areas during the U.S. housing boom of the 2000s. The study notes that buyers of lower‑priced homes were more sensitive to credit conditions, and the findings show patterns consistent with an interaction between buyer beliefs and credit conditions. Jacobson argues that documenting this interaction is important for treating beliefs and credit conditions as joint explanations, rather than competing ones, for the boom. The research is part of the Fed’s economic research agenda and is preliminary, intended to stimulate discussion.
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