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Discussion Paper
Do People View Housing as a Good Investment and Why?
Haughwout, Andrew F.; Liu, Haoyang; Parker, Dean; Zhang, Xiaohan (2021-04-05)
Housing represents the largest asset owned by most households and is a major means of wealth accumulation, particularly for the middle class. Yet there is limited understanding of how households view housing as an investment relative to financial assets, in part because of their differences beyond the usual risk and return trade-off. Housing offers households an accessible source of leverage and a commitment device for saving through an amortization schedule. For an owner-occupied residence, it also provides stability and hedges for rising housing costs. On the other hand, housing is much ...
Liberty Street Economics , Paper 20210405b

Essay
Arrival of Interstate Highway System Brought Housing Wealth, but to Whom?
Cohen, Jeffrey P.; Ricketts, Lowell R. (2022-05-10)
Interstate highways increased household wealth through higher house values, but racial inequities in homeownership meant few residents of color reaped these gains.
Economic Equity Insights

Journal Article
Movin' On Up
Gavin, William T. (2006-04)
More young people, poor people and minorities are buying homes these days, but not because of tax deductions or government affordable-housing programs.
The Regional Economist , Issue Apr

Journal Article
Spotlight on Research: Down Payment Assistance Plays Critical Role in Affordable Homeownership
Smith, Marvin M. (2016-04)
In the aftermath of the recent Great Recession, there has been a tightening in mortgage lending practices. This cautious atmosphere has been prompted in large part by the rash of foreclosures in the housing market that accompanied the financial crisis. One potential safeguard is the existence of a down payment requirement that must be met by prospective homebuyers as a condition of securing a mortgage. The rationale is that when individuals invest their own money in the form of a down payment, the potential homebuyers will be more motivated to maintain their mortgage obligations. For those ...
Cascade , Volume 2

Working Paper
Financing Affordable and Sustainable Homeownership with Fixed-COFI Mortgages
Passmore, Wayne; von Hafften, Alexander H. (2018-02-05)
The 30-year fixed-rate fully amortizing mortgage (or ?traditional fixed-rate mortgage?) was a substantial innovation when first developed during the Great Depression. However, it has three major flaws. First, because homeowner equity accumulates slowly during the first decade, homeowners are essentially renting their homes from lenders. With this sluggish equity accumulation, many lenders require large down payments. Second, in each monthly mortgage payment, homeowners substantially compensate capital markets investors for the ability to prepay. The homeowners might have better uses for this ...
Finance and Economics Discussion Series , Paper 2018-009

Working Paper
Monetary Policy and Homeownership: Empirical Evidence,Theory, and Policy Implications
Dias, Daniel A.; Duarte, Joao B. (2022-05-19)
We show that monetary policy affects homeownership decisions and argue that this effect is an important and overlooked channel of monetary policy transmission. We first document that monetary policy shocks are a substantial driver of fluctuations in the U.S. homeownership rate and that monetary policy affects households' housing tenure choices. We then develop and calibrate a two-agent New Keynesian model that can replicate the estimated transmission of monetary policy shocks to homeownership rates and housing rents. We find that the calibrated model provides an explanation to the "price ...
International Finance Discussion Papers , Paper 1344

Working Paper
Are Real Assets Owners Less Averse to Inflation? Evidence from Consumer Sentiments and Inflation Expectations
Li, Geng; Sinha, Nitish R. (2023-08-31)
Using data from the University of Michigan Surveys of Consumers, we document a significant negative association between consumer sentiment and inflation expectations, controlling for prevailing inflation in the economy. We further show that consumer sentiments of homeowners and stockowners are more sensitive to expected inflation than those of other consumers, a disparity at odds with the notion that owning such assets provides hedges against inflation. Leveraging data from the Survey of Consumer Expectations, we find three factors that help account for this difference. First, assets owners' ...
Finance and Economics Discussion Series , Paper 2023-058

Working Paper
Rushing into American Dream? House Prices, Timing of Homeownership, and Adjustment of Consumer Credit
Agarwal, Sumit; Hu, Luojia; Huang, Xing (2013-11-01)
In this paper we use a large panel of individuals from Consumer Credit Panel dataset to study the timing of homeownership as a function of credit constraints and expectations of future house price. Our panel data allows us to track individuals over time and we model the transition probability of their first home purchase. We find that in MSAs with highest quartile house price growth, the median individual become homeowners earlier by 5 years in their lifecycle compared to MSAs with lowest quartile house price growth. The result suggests that the effect of expectation dominates the effect of ...
Working Paper Series , Paper WP-2013-13

Working Paper
Effects of Monetary Policy on Household Expectations: The Role of Homeownership
Ahn, Hie Joo; Yang, Choongryul (2022-10-03)
We study the role of homeownership in the effectiveness of monetary policy on households' expectations. Empirically, we find that homeowners revise down their near-term inflation expectations and their optimism about future labor market conditions in response to a rise in mortgage rates, while renters are less likely to do so. We further show that the monetary-policy component of mortgage-rate changes creates the difference in expectation revisions between homeowners and renters. This result suggests that homeowners are attentive to news on interest rates and adjust their expectations ...
Finance and Economics Discussion Series , Paper 2022-065

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

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