How Do Housing Markets Affect Local Consumer Prices? – Evidence from U.S. Cities
Analyzing city-level retail price data for a variety of consumer products, we find that house price changes lead local consumer price changes, but not vice versa. The transmission of the house price changes differs substantially across locations and products. It also hinges on the nature of housing market shocks; housing supply shocks propagate through the cost-push channel via local cost and markup effects, while housing demand shocks transmit through conventional wealth and collateral effects. Our findings suggest that housing may exert greater impacts on the local cost-of-living and ...
Housing Market Value Impairment from Future Sea-level Rise Inundation
Sea level rise will pose increased risks to U.S. coastal real estate markets in the coming decades, though the direct economic costs depend on the severity and uncertainty within climate-change scenarios.
The Housing Market and the Pandemic
The Housing Market and Its Influences
The housing market influences our economic and social well-being. It serves as a prime mover of overall economic activity, the foundation for wealth creation, and the basis for the landscape of our neighborhoods as well as the dynamic relationship between cities (particularly older ones) and suburbs. The recent downturn in the housing market generated changes in its aforementioned influences. It also fostered changes in the regulatory environment in the mortgage market. These topics were discussed at the 2014 Reinventing Older Communities conference.
Official Monetary and Financial Institutions Forum Fed Week Financial Stability Session
Short-term credit markets have been disrupted in the past two recessions, and significant risks remain. For example, prime money market mutual funds and stablecoins bear attention. Substantial emergency actions were necessary to support lending during the pandemic, and the economy would benefit from being less dependent on ad hoc measures in crises. A properly implemented Countercyclical Capital Buffer, or CCyB, would help avoid some of these issues. Unfortunately, emergency facilities do well supporting large firms but are challenged somewhat to reach small firms. Without better facilities ...
Monetary Policy, Hot Housing Markets and Leverage
Expansionary monetary policy can increase household leverage by stimulating housing liquidity. Low mortgage rates encourage buyers to enter the housing market, raising the speed at which properties can be sold. Because lenders can resell seized foreclosure inventory at lower cost in such a hot housing market, ex-ante they are comfortable financing a larger fraction of the house purchase. Consistent with this mechanism, this study documents empirically that both the housing sales rate and loan-to-value ratios increase after expansionary monetary policy. Calibrating a New Keynesian ...
Policy Uncertainty and Bank Mortgage Credit
We document that banks reduce supply of jumbo mortgage loans when policy uncertainty increases as measured by the timing of US gubernatorial elections in banks' headquarter states. The reduction is larger for more uncertain elections. We utilize high-frequency, geographically granular loan data to address an identification problem arising from changing demand for loans: (1) the microeconomic data allow for state/time (quarter) fixed effects; (2) we observe banks reduce lending not just in their home states but also outside their home states when their home states hold elections; (3) we ...
Is the Light Rail “Tide” Lifting Property Values? Evidence from Hampton Roads, Virginia
In this paper we examine the effect of light rail transit on the residential real estate market in Hampton Roads, Virginia. The Norfolk Tide light rail began operations in August 2011 and has experienced disappointing levels of ridership over its first four years of operations. We estimate the effect of the Tide using a difference-in-differences model and consider several outcome variables for the residential housing market, including sales price, sales-list price spread and the time-on-market. Our identification strategy exploits a proposed rail line in neighboring Virginia Beach, Virginia, ...
The ins and arounds in the U.S. housing market
In the United States, 15 percent of households change residence in a given year. This result is based on data from the Panel Study of Income Dynamics on gross flows within and between the two segments of the housing market ? renter-occupied properties and owner-occupied properties. The gross flows between these two segments are four times larger than the net flows. From a secular perspective, housing turnover exhibits a hump-shaped pattern between 1970 and 2000, which this paper attributes to changes in the age composition of the U.S. population. At higher frequencies, housing turnover is ...
REGIME SHIFT AND THE POST-CRISIS WORLD OF MORTGAGE LOSS SEVERITIES
The average loss rate for conventional mortgages rose from less than 10% pre-crisis to more than 30% during the crisis, reaching and sustaining greater than 40% post-crisis. Using a novel database that contains the components of mortgage losses, we identify a regime shift in loss severities caused by various government interventions and changes in business practices in the servicing industry. This regime shift helps explain the persistently high loss severities post-crisis, even after a strong recovery in the housing market. Our findings have implications for loss modeling, pricing, and, ...