Search Results
Discussion Paper
Mortgage Rate Lock‑In and Homeowners’ Moving Plans
The U.S. housing market has had a tumultuous few years. After falling to record lows during the pandemic, the average 30-year mortgage rate rapidly increased in 2022 and 2023 and now hovers near a two-decade high of 7.2 percent. For those that locked in a low mortgage rate prior to 2022, this steep increase has significantly increased the cost of moving, as taking out a mortgage at current rates would potentially increase their monthly housing payment by hundreds or thousands of dollars, even if the amount they borrowed remained unchanged. As shown by Ferreira et al. (2011), this lock-in ...
Working Paper
Does Zoning Help or Hinder Transit-Oriented (Re)Development?
Despite its reputation as a car-oriented city, the Los Angeles metropolitan area has made substantial investments in developing rail transit since 1990. In cities with older "legacy" rail systems, the built environment has developed over time around fixed transit infrastructure, creating land use patterns oriented towards long-standing rail stations. By contrast, rail stations in Los Angeles were added to an already dense built environment, with auto oriented zoning and established land use patterns. In this paper we ask whether redevelopment is occurring around Los Angeles? rail stations, ...
Working Paper
Owner-Occupancy Fraud and Mortgage Performance
We use a matched credit bureau and mortgage dataset to identify occupancy fraud in residential mortgage originations, that is, borrowers who misrepresented their occupancy status as owner-occupants rather than residential real estate investors. In contrast to previous studies, our dataset allows us to show that – during the housing bubble – such fraud was broad based, appearing in the government-sponsored enterprise market and in loans held on bank portfolios as well, and increases the effective share of investors by 50 percent. We show that a key benefit of investor fraud was obtaining a ...
Journal Article
Housing affordability: recommendations for new research to guide policy
This article highlights areas where economic research is needed to guide federal policymakers addressing the challenge of improving housing affordability. The author places these research recommendations in the framework of five key issues, reflecting policymakers? need to identify a rationale for government action; to employ a single, clear measure to gauge affordability; to understand the unintended consequences of current housing policies; to ensure that the political environment is considered when developing policy; and to decide whether to use housing finance reform as a means of ...
Discussion Paper
Differences in Rent Inflation by Cost of Housing
We know that different people experience different inflation rates because the bundle of goods and services that they consume is different from that of the "typical" household. This phenomenon is discussed in this publication from the Bureau of Labor Statistics (BLS), and this article from the New York Fed. But did you know that there are substantial differences in inflation experience depending on the level of one's housing costs? In this post, which is based upon our updated staff report on ?The Measurement of Rent Inflation,? we present evidence that price changes for rent, which ...
Discussion Paper
Corporate Landlords, Institutional Investors, and Displacement: Eviction Rates in SingleFamily Rentals
In this research we document the eviction crisis in the city of Atlanta and adjacent suburbs. We place eviction-driven housing instability in the broader context of changing housing markets, examining the relationships between post-foreclosure single-family rentals, large corporate landlords, and eviction rates. The rise of the large corporate landlord in the single-family rental market has the potential to rehabilitate vacant properties and offer affordable housing in desirable neighborhoods, or conversely could perpetuate housing instability and spatial inequality. To understand the ...
Newsletter
Bank Exposure to Commercial Real Estate and the Covid-19 Pandemic
The Covid-19 pandemic had an immediate and substantial impact on the commercial real estate (CRE) market—emptying workplaces, shopping centers, and hotels, thus affecting the cash flows of businesses occupying commercial space and in turn the ability of commercial space owners to meet their debt obligations.Delinquent CRE loans began to surface soon after the pandemic started and remain elevated in 2021. Broad loan delinquencies would represent a potential threat to bank capitalization and solvency, particularly for smaller banks that tend to have higher concentrations in CRE lending. ...
Discussion Paper
The Graying of American Debt
The U.S. population is aging and so are its debts. In this post, we use the New York Fed Consumer Credit Panel, which is based on Equifax credit data, to look at how debt is changing as baby boomers reach retirement age and millennials find their footing. We find that aggregate debt balances held by younger borrowers have declined modestly from 2003 to 2015, with a debt portfolio reallocation away from credit card, auto, and mortgage debt, toward student debt. Debt held by borrowers between the ages of 50 and 80, however, increased by roughly 60 percent over the same time period. This ...
Discussion Paper
The Evolution of Home Equity Ownership
In yesterday’s post, we discussed the extreme swings that household leverage has taken since 2005, using combined loan-to-value (CLTV) ratios for housing as our metric. We also explored the risks that current household leverage presents in the event of a significant downturn in prices. Today we reverse the perspective, and consider housing equity—the value of housing net of all debt for which it serves as collateral. For the majority of households, housing equity is the principal form of wealth, other than human capital, and it thus represents an important form of potential collateral for ...
Working Paper
Owner-Occupancy Fraud and Mortgage Performance
We identify occupancy fraud — borrowers who misrepresent their occupancy status as owner-occupants rather than investors — in residential mortgage originations. Unlike previous work, we show that fraud was prevalent in originations not just during the housing bubble, but also persists through more recent times. We also demonstrate that fraud is broad-based and appears in government-sponsored enterprise and bank portfolio loans, not just in private securitization; these fraudulent borrowers make up one-third of the effective investor population. Occupancy fraud allows riskier borrowers to ...