The chart showing Phoenix prices and Fed Funds rate is surprising since high prices usually coincide with low rates. However, the actual events leading to the housing bubble were different. A wave of migrants from Los Angeles to Phoenix due to housing shortages caused prices to spike. Surprisingly, the Fed slowing down construction led to the spike in prices. Debt in Arizona rose after construction peaked, showing reckless borrowing wasn’t the cause of the bubble. Richard Fisher believed rate cuts wouldn’t stabilize the market, and permits for single-family homes in Phoenix dropped significantly in 2007. The traditional credit bubble narrative may need revision based on these findings.

Read more at Investing.com: Debt Lagged the Boom: Phoenix’s Housing Crisis Wasn’t What You Were Told