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The Propagation of Demand Shocks Through Housing Markets
Housing demand stimulus produces a multiplier effect by freeing up owners attempting to sell their current home, allowing them to re-enter the market as buyers and triggering a chain of further transactions. Exploiting a shock to first-time home buyer demand caused by the 2015 surprise cut in Federal Housing Administration mortgage insurance premiums, we find that homeowners buy their next home sooner when the probability of their current home selling increases. This effect is especially pronounced in cold housing markets, in which homes take a long time to sell. We build and calibrate a ...
Endogenous sources of volatility in housing markets: the joint buyer-seller problem
This paper presents new empirical evidence that internal movement--selling one home and buying another--by existing homeowners within a metropolitan housing market is especially volatile and the main driver of fluctuations in transaction volume over the housing market cycle. We develop a dynamic search equilibrium model that shows that the strong pro-cyclicality of internal movement is driven by the cost of simultaneously holding two homes, which varies endogenously over the cycle. We estimate the model using data on prices, volume, time-on-market, and internal moves drawn from Los Angeles ...
Using Data on Seller Behavior to Forecast Short-run House Price Changes
We construct a new "list-price index" that accurately reveals trends in house prices several months before existing sales price indices like Case-Shiller. Our index is based on the repeat-sales approach but for recent months uses listings data, which are available essentially in real time, instead of transactions data, which become available with signiffcant lags. Our index methodology is motivated by a simple model of the home-selling problem that shows how listings variables such as the list price and marketing time help predict the final sales price. In a sample of three large MSAs over ...
Information frictions and housing market dynamics
This paper examines the effects of seller uncertainty over their home value on the housing market. Using evidence from a new dataset on home listings and transactions, I first show that sellers do not have full information about current period demand conditions for their homes. I incorporate this type of uncertainty into a dynamic search model of the home selling problem with Bayesian learning. Simulations of the estimated model show that information frictions help explain short-run persistence in price appreciation rates and a positive (negative) correlation between price changes and sales ...
Measuring Mortgage Credit Availability : A Frontier Estimation Approach
We construct a new measure of mortgage credit availability that describes the maximum amount obtainable by a borrower of given characteristics. We estimate this "loan frontier" using mortgage originations data from 2001 to 2014 and show that it reflects a binding borrowing constraint. Our estimates reveal that the expansion of mortgage credit during the housing boom was substantial for all borrowers, not only for low-score or low-income borrowers. The contraction was most pronounced for low-score borrowers. Using variation in the frontier across metropolitan areas over time, we show that ...
Can More Housing Supply Solve the Affordability Crisis? Evidence from a Neighborhood Choice Model
We estimate a neighborhood choice model using 2014 American Community Survey data to investigate the degree to which new housing supply can improve housing affordability. In the model, equilibrium rental rates are determined so that the number of households choosing each neighborhood is equal to the number of housing units in each neighborhood. We use the estimated model to simulate how rental rates would respond to an exogenous increase in the number of housing units in a neighborhood. We find that the rent elasticity is low, and thus marginal reductions in supply constraints alone are ...
Estimates of the size and source of price declines due to nearby foreclosures: evidence from San Francisco
Using a novel dataset which merges real estate listings with real estate transactions in San Francisco from 2007-2009, we present new evidence that foreclosures causally depress nearby home prices. We show that this decrease occurs only after the foreclosed home is listed for sale, which suggests that the effect is due to the additional housing supply created by foreclosure rather than from neglect of the foreclosed property. Consistent with a framework where a foreclosed home simply increases supply, we find that new listings of foreclosed homes and non-foreclosed homes each lower sales ...
The Branch Puzzle : Why Are there Still Bank Branches?
We provide evidence that the persistence of the large number of local bank branches across the country may be due to the fact that both depositors and small businesses continue to value local bank branches.
On the Geographic Scope of Retail Mortgage Markets
In this note, we first discuss why markets for mortgage originations are likely to be national in scope. We then show that even if mortgage markets were local, they would be unconcentrated. Finally, we test for an empirical relationship between the local concentration of mortgage lending and changes in mortgage rates and find essentially no correlation of concentration and rates.
On the Benefits of Universal Banks : Concurrent Lending and Corporate Bond Underwriting
In this note, we explore whether "universal banks" provide value to firms through their ability to provide both lending and underwriting services.