scholarly journals Accuracy of Households’ Dwelling Valuations, Housing Demand and Mortgage Decisions: Israeli Case

2021 ◽  
Author(s):  
Alla Koblyakova ◽  
Larisa Fleishman ◽  
Orly Furman
Keyword(s):  
Academic Research ◽  
House Price ◽  
Housing Demand ◽  
Empirical Estimation ◽  
Cross Sectional ◽  
Price Expectations ◽  
Housing Services ◽  
House Price Expectations ◽  
Supply Side Factors

AbstractHousing policy, as well as academic research, are increasingly concerned with the role of bias in subjective dwelling valuations as a proximate measure of households’ house price expectations and their relationship with housing demand. This paper contributes to this area of study by exploring the possibility of simultaneous relationships between households’ price expectations and incentive to maximise the size of housing services demanded also accounting for the supply side factors and regional perspective. The empirical estimation takes the form of a system of a two simultaneous equations model applying two stage least squares estimation technique. Cross sectional estimations utilise data extracted from the Israeli Longitudinal Panel Survey (LPS) data. Applying the best available proxy for households’ price expectations, calculated as the ratio between subjective dwelling valuations (LPS) and the estimated market value of the same properties, research has identified the interrelated factors that simultaneously influence householders’ price expectations and housing demand. Results offer conceptual and empirical advantages, highlighting the imperfect nature of the housing market, as reflected by the inseparability of bias in subjective valuations and housing decisions.

The Role of Housing and Mortgage Markets in the Financial Crisis

2018 ◽  
Vol 10 (1) ◽  
pp. 25-41 ◽  
Author(s):  
Manuel Adelino ◽  
Antoinette Schoar ◽  
Felipe Severino
Keyword(s):  
Financial Crisis ◽  
Middle Class ◽  
House Price ◽  
Mortgage Lending ◽  
Subprime Crisis ◽  
Price Expectations ◽  
The Great Recession ◽  
Widespread Agreement ◽  
House Price Expectations

Ten years after the financial crisis of 2008, there is widespread agreement that the boom in mortgage lending and its subsequent reversal were at the core of the Great Recession. We survey the existing evidence, which suggests that inflated house-price expectations across the economy played a central role in driving both the demand for and the supply of mortgage credit before the crisis. The great misnomer of the 2008 crisis is that it was not a subprime crisis but rather a middle-class crisis. Inflated house-price expectations led households across all income groups, especially the middle class, to increase their demand for housing and mortgage leverage. Similarly, banks lent against increasing collateral values and underestimated the risk of defaults. We highlight how these emerging facts have essential implications for policy.

scholarly journals What Drives House Price Cycles? International Experience and Policy Issues

2021 ◽  
Vol 59 (3) ◽  
pp. 773-864
Author(s):  
John V. Duca ◽  
John Muellbauer ◽  
Anthony Murphy
Keyword(s):  
Financial Stability ◽  
House Prices ◽  
Supply And Demand ◽  
Housing Prices ◽  
House Price ◽  
Policy Makers ◽  
Price Expectations ◽  
Data Tracking ◽  
House Price Expectations

The role of real estate during the global financial and economic crisis has prompted efforts to better incorporate housing and financial channels into macro models, improve housing models, develop macroprudential tools, and reform the financial system. This article provides an overview of major, recent contributions to the literature in relation to earlier research on what drives housing prices and how they affect economic activity. Particularly emphasized are studies, both theoretical and more strongly evidence-based, that connect housing markets with credit markets, house price expectations, financial stability, and the wider economy. The literature reveals much diversity in the international and regional behavior of house prices and the need to improve data tracking key housing supply and demand influences. Also reviewed are studies examining how monetary, macroprudential, and other policies affect house prices and access to housing. This survey is designed to help readers navigate the plethora of recent studies and understand the unsettled issues and avenues for further research. The findings should be of interest to policy makers concerned with financial stability as well as those dealing with the role of housing in the wider economy (JEL E32, E44, E63, G01, G21, R31).

House-Price Expectations, Alternative Mortgage Products, and Default

2013 ◽  
Author(s):  
Jan K. Brueckner ◽  
Paul S. Calem ◽  
Leonard I. Nakamura
Keyword(s):  
House Price ◽  
Price Expectations ◽  
House Price Expectations

House-Price Expectations, Alternative Mortgage Products, and Default

2015 ◽  
Author(s):  
Jan K. Brueckner ◽  
Paul S. Calem ◽  
Leonard I. Nakamura
Keyword(s):  
House Price ◽  
Price Expectations ◽  
House Price Expectations

scholarly journals House Price Beliefs And Mortgage Leverage Choice

2018 ◽  
Vol 86 (6) ◽  
pp. 2403-2452 ◽  
Author(s):  
Michael Bailey ◽  
Eduardo Dávila ◽  
Theresa Kuchler ◽  
Johannes Stroebel
Keyword(s):  
Housing Market ◽  
House Prices ◽  
House Price ◽  
Heterogeneous Beliefs ◽  
The Other ◽  
Cross Sectional ◽  
Financial Decisions ◽  
The Relationship ◽  
The U.S

Abstract We study the relationship between homebuyers’ beliefs about future house price changes and their mortgage leverage choices. Whether more pessimistic homebuyers choose higher or lower leverage depends on their willingness and ability to reduce the size of their housing market investments. When households primarily maximize the levered return of their property investments, more pessimistic homebuyers reduce their leverage to purchase smaller houses. On the other hand, when considerations such as family size pin down the desired property size, pessimistic homebuyers reduce their financial exposure to the housing market by making smaller downpayments to buy similarly-sized homes. To determine which scenario better describes the data, we investigate the cross-sectional relationship between house price beliefs and mortgage leverage choices in the U.S. housing market. We use plausibly exogenous variation in house price beliefs to show that more pessimistic homebuyers make smaller downpayments and choose higher leverage, in particular in states where default costs are relatively low, as well as during periods when house prices are expected to fall on average. Our results highlight the important role of heterogeneous beliefs in explaining households’ financial decisions.

scholarly journals House Price Expectations

2014 ◽  
Author(s):  
Geng Niu ◽  
Arthur H. O. <!>van Soest
Keyword(s):  
House Price ◽  
Price Expectations ◽  
House Price Expectations
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