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Working Paper
Late Payment Fees and Nonpayment in Rental Markets, and Implications for Inflation Measurement: Theoretical Considerations and Evidence
Janson, Wesley; Verbrugge, Randal (2021-04-06)
tatistical agencies track rental expenditures for use in the national accounts and in consumer price indexes (CPIs). As such, statistical agencies should include late payment fees and nonpayment in rent. In the US context, late payment fees are excluded from the CPI. Ostensibly, nonpayment of rent is included in the US CPI; but its treatment is deficient, and we demonstrate that small variations in nonpayment could lead to large swings in shelter inflation, and might have played a role in the 2009 measured shelter inflation collapse. They didn’t: while the national nonpayment incidence is ...
Working Papers , Paper 20-22R

Working Paper
Interregional Migration and Housing Vacancy: Theory and Empirics
Cohen, Jeffrey P.; Crews, Jonas C.; Coughlin, Cletus C. (2020-10-16)
We examine homeowner vacancy rate interdependencies over time and space through the channel of migration. Our theoretical analysis extends the Wheaton (1990) search and matching model for housing by incorporating interregional spillovers due to some households’ desires to migrate between regions and by allowing for regime-switching behavior. Our empirical analysis of vacancy rates for the entire U.S. and for Census regions provides visual evidence for the possibility of regime-switching behavior. We explicitly test our model by estimating basic Vector Autoregression (VAR) and ...
Working Papers , Paper 2018-007

Working Paper
The Marginal Effect of Government Mortgage Guarantees on Homeownership
Kim, You Suk; Grundl, Serafin J. (2019-04-16)
The U.S. government guarantees a majority of residential mortgages, which is often justified as a means to promote homeownership. In this paper we use property-level data to estimate the effect of government mortgage guarantees on homeownership, by exploiting variation of the conforming loan limits (CLLs) along county borders. We find substantial effects on government guarantees, but find no robust effect on homeownership. This finding suggests that government guarantees could be considerably reduced with modest effects on homeownership, which is relevant for housing finance reform plans that ...
Finance and Economics Discussion Series , Paper 2019-027

Discussion Paper
Small-Dollar Mortgages for Single-Family Residential Properties
Strochak, Sarah; McCargo, Alanna; George, Taz; Bai, Bing (2018-04-01)
There is a significant lack of financing available for low-cost homes, which many first-time homebuyers and low- and middle-income families rely on to move from renting to homeownership. This brief examines the availability of small-dollar mortgages (up to $70,000) for home purchases, refinances, and improvements, presenting a wealth of information on borrower and loan characteristics, production channels, and the geographic distribution of low-cost homes. We find that there is limited mortgage availability for the small loans needed to support the significant number of low-cost property ...
Policy Discussion Paper Series

Working Paper
Technological innovation in mortgage underwriting and the growth in credit, 1985–2015
Foote, Christopher L.; Loewenstein, Lara; Willen, Paul S. (2019-11-01)
The application of information technology to finance, or ?fintech,? is expected to revolutionize many aspects of borrowing and lending in the future, but technology has been reshaping consumer and mortgage lending for many years. During the 1990s, computerization allowed mortgage lenders to reduce loan-processing times and largely replace human-based assessments of credit risk with default predictions generated by sophisticated empirical models. Debt-to-income ratios at origination add little to the predictive power of these models, so the new automated underwriting systems allowed higher ...
Working Papers , Paper 19-11

Discussion Paper
Moving Out of a Flood Zone? That May Be Risky!
Blickle, Kristian S.; Engelman, Katherine; Linnemann, Theo; Santos, João A. C. (2023-04-20)
An often-overlooked aspect of flood-plain mapping is the fact that these maps designate stark boundaries, with households falling either inside or outside of areas designated as “flood zones.” Households inside flood zones must insure themselves against the possibility of disasters. However, costly insurance may have pushed lower-income households out of areas officially designated a flood risk and into physically adjacent areas. While not designated an official flood risk, Federal Emergency Management Agency (FEMA) and disaster data shows that these areas are still at considerable risk ...
Liberty Street Economics , Paper 20230420b

Working Paper
Understanding house price index revisions
Elul, Ronel; Silverstein, Joseph M.; Stark, Tom (2014-12-22)
Residential house price indexes (HPI) are used for a large variety of macroeconomic and microeconomic research and policy purposes, as well as for automated valuation models. As is well known, these indexes are subject to substantial revisions in the months following the initial release, both because transaction data can be slow to come in, and as a consequence of the repeat sales methodology, which interpolates the effect of sales over the entire period since the house last changed hands. We study the properties of the revisions to the CoreLogic House Price Index. This index is used both by ...
Working Papers , Paper 14-38

Discussion Paper
Who Has Been Evicted and Why?
Haughwout, Andrew F.; Zhang, Xiaohan; Liu, Haoyang (2020-07-08)
More than two million American households are at risk of eviction every year. Evictions have been found to cause prolonged homelessness, worsened health conditions, and lack of credit access. During the COVID-19 outbreak, governments at all levels implemented eviction moratoriums to keep renters in their homes. As these moratoriums and enhanced income supports for unemployed workers come to an end, the possibility of a wave of evictions in the second half of the year is drawing increased attention. Despite the importance of evictions and related policies, very few economic studies have been ...
Liberty Street Economics , Paper 20200708b

Working Paper
Late Payment Fees and Nonpayment in Rental Markets, and Implications for Inflation Measurement: Theoretical Considerations and Evidence
Janson, Wesley; Verbrugge, Randal J. (2023-11-06)
Accurate rent measurement is essential for constructing a consumer price index (CPI) and for measuring household welfare. Late payment fees and nonpayment of rent are common components of rental expenditures and thus belong in CPIs. Late payment fees are often excluded; we offer a novel critique. In the US CPI, nonpayment is ostensibly included, but, we show, severely undermeasured. Moreover, the manner of its inclusion renders the CPI extremely sensitive to nonpayment variations; we show how to fix this. Nonpayment undermeasurement suggests at least a +1 ppt overestimate in 2020 CPI shelter ...
Working Papers , Paper 20-22R2

Working Paper
The Closing of a Major Airport: Immediate and Longer-Term Housing Market Effects
Coughlin, Cletus C.; Ross, Stephen L.; Cohen, Jeffrey P.; Crews, Jonas C. (2020-01-08)
The closing of a busy airport has large effects on noise and economic activity. Using a unique dataset, we examine the effects of closing Denver’s Stapleton Airport on nearby housing markets. We find evidence of immediate anticipatory price effects upon announcement, but no price changes at closing likely because closing was widely anticipated. Further, after airport closure, high income and white households moved into these locations and developers upgraded the quality of houses being built. Finally, post-closing, these demographic and housing stock changes had substantial effects on ...
Working Papers , Paper 2020-001

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