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Working Paper
National and Regional Housing Vacancy: Insights Using Markov-switching Models
Cohen, Jeffrey P.; Crews, Jonas C.; Coughlin, Cletus C. (2018-05-11)
We examine homeowner vacancy rates over time and space using Markov-switching models. Our theoretical analysis extends the Wheaton (1990) search and matching model for housing by incorporating regime-switching behavior and interregional spillovers. Our approach is strongly supported by our empirical results. Estimations, using constant-only as well as Vector Autoregressions, allow us to examine differences in vacancy rates as well as explore the possibility of asymmetries within and across housing markets, depending on the state/regime (e.g., low or high vacancy) of a given housing market. ...
Working Papers , Paper 2018-7

Discussion Paper
Housing Returns in Big and Small Cities
Amaral, Francisco; Dohmen, Martin; Kohl, Sebastian; Schularick, Moritz (2022-02-02)
Houses are the largest asset for most households in the United States, as is the case in many other countries as well. Within countries, there is substantial regional variation in house prices—compare real estate values in Manhattan, New York City, with those in Manhattan, Kansas, for example. But what about returns on investment? Are long-run returns on real estate investment—the sum of price appreciation and rental income flows—higher in superstar cities like New York than in the rest of the country? In this blog post, we present new and potentially surprising insights from research ...
Liberty Street Economics , Paper 20220202

Working Paper
End of the Line: Behavior of HELOC Borrowers Facing Payment Changes
Johnson, Kathleen W.; Sarama, Robert F. (2015-07-10)
An important question in the household finance literature is whether a change in required debt payments affects borrower behavior. One challenge in this literature has been identifying whether higher default rates observed after an increase in debt payments stem from the inability of borrowers to pay the higher amount, or the attrition of better borrowers in advance of the payment change. A related question is whether the higher default rate is a result of specific features of the debt product, or the type of borrower who chooses the product. We address both of these questions as they relate ...
Finance and Economics Discussion Series , Paper 2015-73

Working Paper
A Theory of Sticky Rents: Search and Bargaining with Incomplete Information
Verbrugge, Randal; Gallin, Joshua H. (2017-05-05)
The housing rental market offers a unique laboratory for studying price stickiness. This paper is motivated by two facts: 1. Tenants? rents are remarkably sticky even though regular and expected recontracting would, by itself, suggest substantial rent flexibility. 2. Rent stickiness varies significantly across structure type; for example, detached unit rents are far stickier than large apartment unit rents. We offer the first theoretical explanation of rent stickiness that is consistent with these facts. In this theory, search and bargaining with incomplete information generates stickiness in ...
Working Papers (Old Series) , Paper 1705

Discussion Paper
The Housing Boom and the Decline in Mortgage Rates
Liu, Haoyang; Lucca, David O.; Parker, Dean; Rays-Wahba, Gabriela (2021-09-07)
During the pandemic, national home values and housing activity soared as mortgage rates declined to historic lows. Under the canonical “user cost” house price model, home values are held to be very sensitive to interest rates, especially at low interest rate levels. A calibration of this model can account for the house price boom with the observed decline in interest rates. But empirically, we find that home values are nowhere near as sensitive to interest rates as the user cost model predicts. This lower sensitivity is also found in prior economic research. Thus, the historical ...
Liberty Street Economics , Paper 20210907

Working Paper
Can More Housing Supply Solve the Affordability Crisis? Evidence from a Neighborhood Choice Model
Anenberg, Elliot; Kung, Edward (2018-05-15)
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 ...
Finance and Economics Discussion Series , Paper 2018-035

Working Paper
Measuring Aggregate Housing Wealth : New Insights from an Automated Valuation Model
Molloy, Raven S.; Sommer, Kamila; Smith, Paul A.; Gallin, Joshua H.; Nielsen, Eric R. (2018-09-06)
We construct a new measure of aggregate U.S. housing wealth based on Zillow's Automated Valuation Model (AVM). AVMs offer advantages over other methods because they are based on recent market transaction prices, utilize large datasets which include property characteristics and local geographic variables, and are updated frequently with little lag. However, using Zillow's AVM to measure aggregate housing wealth requires overcoming several challenges related to the representativeness of the Zillow sample. We propose methods that address these challenges and generate a new estimate of aggregate ...
Finance and Economics Discussion Series , Paper 2018-064

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. (2021-01-19)
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 and little evidence of upward trending prices between announcement and closing. However, after airport closure, more higher income and fewer black households moved into these locations, and developers built higher quality houses. Finally, post-closing, these demographic and housing stock changes ...
Working Papers , Paper 2020-001

Journal Article
The Limited Supply of Homes
Rappaport, Jordan (2016-03-23)
Jordan Rappaport finds that a limited supply of single-family homes will continue to constrain home sales and put upward pressure on home prices over the next few years.
Macro Bulletin

Working Paper
Clustered Housing Cycles
Rubio, Margarita; Owyang, Michael T.; Hernandez-Murillo, Ruben (2015-10-22)
Using a panel of U.S. city-level building permits data, we estimate a Markov-switching model of housing cycles that allows for idiosyncratic departures from a national housing cycle. These departures occur for clusters of cities that experience simultaneous housing contractions. We find that cities do not form housing regions in the traditional geographic sense. Instead, similarities in factors affecting the demand for housing (such as average winter temperature and the unemployment rate) appear to be more important determinants of cyclical comovements than similarities in factors affecting ...
Working Papers (Old Series) , Paper 1524

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