While numerous studies rely on market metrics like the price-to-rent ratio to detect housing bubbles, others caution that these divergences often reflect underlying fundamentals or credit transmission speeds rather than definitive speculative bubbles.
The claim posits that specific market metrics (like the price-to-rent ratio) reliably distinguish housing bubbles from genuine valuation increases. Multiple papers use these metrics to detect bubbles and market imbalances, supporting the idea that the metrics are informative. However, other studies argue that these divergences can be driven by credit dynamics or fundamental factors rather than pure bubbles, making the reliability of distinguishing a bubble from genuine appreciation a contested issue in the literature.