For Americans dreaming of owning a home, this decade has been brutal. From the end of 2019 to the end of 2022, the median sales price for homes sold in the U.S. soared 35%, according to the Federal Reserve Bank of St. Louis. It’s dipped only slightly since then.
Economists have blamed much of the surge on the COVID-19 pandemic, when people migrating from large cities to smaller ones drove up prices.
But new research from the McCombs School of Business at The University of Texas at Austin uncovers another, less visible cause: financial fraud.
Samuel Kruger, associate professor of finance; John Griffin, James A. Elkins Centennial Chair in Finance; and doctoral student Prateek Mahajan found that fraud in government-funded pandemic loans explained 22.5% of the average increase in housing prices during 2020 and 2021.
Fraud harmed not only taxpayers but also homebuyers, Griffin says. “It hurt…
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