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Discussion Paper
A Look at the New York-Northern New Jersey Region’s Pandemic Housing Boom
Since the start of the pandemic, home prices in the U.S. have increased by an astonishing 40 percent. The New York-Northern New Jersey region saw a similar meteoric rise, as home prices shot up by 30 percent or more almost everywhere—even in upstate New York, where economic growth was sluggish well before the pandemic hit. New York City is the exception, where home price growth was less than half that pace. Indeed, home prices actually declined in Manhattan early in the pandemic, though they have rebounded markedly since. Much of the region’s home price boom can be traced to the rise in ...
Discussion Paper
Gulf War II Veterans Home Buyers Tax Credit
Over the next few years, large volumes of homes are likely to flow from foreclosure onto lenders? balance sheets as ?real estate owned,? or REO. Without a significant boost to demand, this large volume of ?distressed? real estate could potentially put substantial downward pressure on home prices. Accordingly, new policy initiatives are needed to increase the rate at which properties that flow into REO get reabsorbed back into use as renter- or owner-occupied units. In this post, I make the case for a tax credit for Gulf War II veterans? home purchases.
Working Paper
A Shortage of Short Sales: Explaining the Underutilization of a Foreclosure Alternative
The Great Recession led to widespread mortgage defaults, with borrowers resorting to both foreclosures and short sales to resolve their defaults. I first quantify the economic impact of foreclosures relative to short sales by comparing the home price implications of both. After accounting for omitted variable bias, I find that homes selling as short sales transact at 9.2% to 10.5% higher prices on average than those that sell after foreclosure. Short sales also exert smaller negative externalities than foreclosures, with one short sale decreasing nearby property values by 1 percentage point ...
Report
A simple model of subprime borrowers and credit growth
The surge in credit and house prices that preceded the Great Recession was particularly pronounced in ZIP codes with a higher fraction of subprime borrowers (Mian and Sufi 2009). We present a simple model of prime and subprime borrowers distributed across geographic locations, which can reproduce this stylized fact as a result of an expansion in the supply of credit. Owing to their low incomes, subprime households are constrained in their ability to meet interest payments and hence sustain debt. As a result, when the supply of credit increases and interest rates fall, they take on ...