Question: During past recessions, housing prices generally rose much less than usual, and fell in real terms. Yet in the 2001 recession, housing prices rose much more than average. What factors caused them to rise so rapidly during the recession? On a regional basis, the biggest price increases occurred in New York, Massachusetts, and Florida, regions whose income could generally be tied closely to the stock market (Florida representing retirees from the Northeast). What does that say about the impact of changes in stock prices on the demand for housing? Explain whether that finding is consistent with the permanent income and life cycle hypotheses.