Real Estate Markets and Financial Crises – From the “Gründerkrise” to the “Subprime Mortgage Crisis”

There are significant hints of a strong relationship between the dynamics of real estate markets and financial crises from the second half of the 19th century until today. In spite of research accumulation, it is seemingly ignored that since the late 19th century several financial crises were caused by real estate bubbles, depending on the distinct characteristics of real estate markets. The paper supports the idea that real estate and financial crises show indeed similar and congruent characteristics since the 19th century. This concerns (1) the inherent tendency towards speculative bubbles, (2) the growing significance of globalized finance, (3) credit practices, (4) the close relationship between the banking system and real estate markets and (5) between the real estate business and the stock market. However, the investigation into real estate markets is not only interesting for understanding and explaining the genesis of modern economic crises, but also contributes to the understanding of the emergence of practices of speculation, the indebtedness of private households and social inequalities. Further research on real estate markets promises the contribution towards a better understanding of actors, practices and institutions in modern market society.