Date of Award


Document Type

Union College Only

Degree Name

Bachelor of Arts



First Advisor

Eshragh Motahar




housing, capital, overhang, thesis, growth


The period from 1991 to 2006 was a period of the longest and most steady increase in US housing starts in the post World War II era. This growth came to an abrupt end in late 2006 with the burst of the housing bubble, which subsequently led to the most severe recession since the 1930’s. After 15 years of steady growth, the first quarter of 2006 saw a 30 year high in US housing starts followed by a steep and unprecedented drop-off eventually reaching a 60 year low in the first quarter of 2009. This thesis seeks to investigate the impact of overinvestment in installed capital (capital overhang) in the United States housing market. By adapting current models of investment and capital utilization, this thesis proposes a method of quantifying capital overhang. In addition, this thesis provides evidence that capital overhang currently exists in the United States housing market and that it negatively impacts future housing investment.