Housing production* is exactly the kind of thing Hayek identified as a time delayed production good which can absorb credit, capital, and leverage in a bandwagon of false expectations, only revealed as structural malinvestments at the end of the artificial boom when credit, inputs, and leverage unavoidably become scarce — and false promises are revealed as impossible to fulfill expectations about the price and supply of inputs, outputs, leverage, and credit.
So Vernon Smith’s account of the American trade cycle 1920-2010 (pdf) as a housing cycle cashes out like a hand in the glove with the conceptual categories of Hayek’s trade cycle theory. A general point I’ve made before.
Want shorter Vernon Smith? Read it here.
*On housing as a long period production good, see F. A. Hayek, The Pure Theory of Capital.