scholarly journals House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis

2010 ◽  
Author(s):  
Atif R. Mian ◽  
Amir Sufi
Keyword(s):  
House Prices ◽  
Home Equity ◽  
The U.S

scholarly journals House Prices, Home Equity and Health

2013 ◽  
Author(s):  
Eleonora Fichera ◽  
John Gathergood
Keyword(s):  
House Prices ◽  
Home Equity

scholarly journals House Prices, Home Equity–Based Borrowing, and the US Household Leverage Crisis

2011 ◽  
Vol 101 (5) ◽  
pp. 2132-2156 ◽  
Author(s):  
Atif Mian ◽  
Amir Sufi
Keyword(s):  
Instrumental Variables ◽  
House Prices ◽  
Significant Fraction ◽  
Household Debt ◽  
Home Equity ◽  
Instrumental Variables Estimation ◽  
The Us ◽  
Credit Scores

Borrowing against the increase in home equity by existing homeowners was responsible for a significant fraction of the rise in US household leverage from 2002 to 2006 and the increase in defaults from 2006 to 2008. Instrumental variables estimation shows that homeowners extracted 25 cents for every dollar increase in home equity. Home equity–based borrowing was stronger for younger households and households with low credit scores. The evidence suggests that borrowed funds were used for real outlays. Home equity–based borrowing added $1.25 trillion in household debt from 2002 to 2008, and accounts for at least 39 percent of new defaults from 2006 to 2008. JEL: D14, R31

scholarly journals House Prices, Home Equity Borrowing, and Entrepreneurship

2015 ◽  
Vol 28 (8) ◽  
pp. 2399-2428 ◽  
Author(s):  
Stefano Corradin ◽  
Alexander Popov
Keyword(s):  
House Prices ◽  
Home Equity

scholarly journals Home Equity Insurance & The Demise Of Home Value Insurance Corporation

2014 ◽  
Vol 30 (6) ◽  
pp. 1709
Author(s):  
Zachary A. Smith ◽  
Alan Harper
Keyword(s):  
Real Estate ◽  
Housing Prices ◽  
Real Estate Market ◽  
Insurance Company ◽  
Home Equity ◽  
Put Options ◽  
Home Value ◽  
Option Pricing Model ◽  
The Cost ◽  
The U.S

<p>This study uses the demise of the Home Value Insurance Company (HVIC) to explore whether the concept of home equity insurance is implementable. Shiller, R. and Weiss, A. (1999) and Goetzmann, W., Caplin, A., Hangen, E., Nalebuff, B., Prentce, E., Rodkin, J., Spiegel, M. and Skinner, T. (2003) have provided a platform to evaluate this concept by questioning whether a product that allows homeowners to transfer the risk associated with a decline in housing prices should be structured as insurance. This study explores the cost associated, in the U.S. Real Estate Market, with this risk transfer process in the pre and post mortgage crisis periods by simulating the cost of insurance using the theoretical pricing of ATM (at the money) put options based upon the Black Scholes Option Pricing Model from 1989 to 2013. As the U.S. Housing Market transitioned from the pre-crisis to the post-crisis periods the hypothetical breakeven cost of insurance increased from 0.60% to 20.85% of the starting value of the index. The demise of HVIC seems to be a cautionary tale: Given the recent changes in the underlying dynamics of the U.S. Real Estate Market it does not seem prudent (for insurers) to use insurance contracts to transfer the risk associated with a decline in the value of U.S. Residential Equity Wealth.</p>

scholarly journals Navigating the Turbulent Economic Waters of the 2007 Great Recession and the Crash of the Housing Market

10.28945/3947 ◽  
2018 ◽  
Vol 2 ◽  
pp. 001-019
Keyword(s):  
Housing Market ◽  
Great Depression ◽  
Great Recession ◽  
Economic Downturn ◽  
Home Equity ◽  
Economic Activities ◽  
The Great Recession ◽  
The Great Depression ◽  
Economic Production ◽  
The U.S

What triggered the crash of the U.S. housing market? This analysis looks at the economic and industry forces that led to an economic downturn that put as many as half of all U.S. residential builders out of business. Since the Great Depression, the U.S. housing market has significantly influenced economic production and employment levels. Direct and indirect investments in the housing industry, along with the induced economic activities such as real estate transactions and construction as well as other factors, accounted for an estimated 15-20% of GDP during boom years (CBPP, 2012). The burst of the $8 trillion housing bubble in 2007 and the subsequent collapse of the financial markets in 2008 created massive disarray in homebuilding (Bivens, 2011). As many as 50% of homebuilders closed their doors, either voluntarily or through bankruptcy filings (Quint, 2015). Concurrently, from 2006 through 2012, the Great Recession resulted in the loss of over $7 trillion of home equity (Gould Ellen, 2012). Over 24 percent of home mortgages went “underwater” with balances exceeding home values (Carter & Gottschalck, n.d.). For some homeowners, the unfortunate thought of losing their homes through foreclosure and incurring disruption to family life became a reality. The stress from threats of the loss of a home, unemployment, and depletion of savings exacted a great toll on many. Not since the Great Depression has the U.S. economy faced forces so devastating to the housing market and personal wealth.

scholarly journals International Real Estate Review

2021 ◽  
Vol 24 (1) ◽  
pp. 19-58
Author(s):  
Zongyuan Li ◽  
◽  
Rose Lai ◽  
Keyword(s):  
House Prices ◽  
Balance Sheet ◽  
Housing Markets ◽  
Metropolitan Statistical Area ◽  
Liquidity Shocks ◽  
Balance Sheet Liquidity ◽  
Using Data ◽  
Fundamental Values ◽  
Statistical Area ◽  
The U.S

This paper is about investigating how different bank liquidity creation activities affect housing markets. Using data of 401 metropolitan statistical areas/metropolitan statistical area divisions (MSAs/MSADs) of the U.S. between 1990 and 2018, we show that not all bank liquidity creation activities boost the housing markets. In particular, unlike assetside and off- balance sheet liquidity creations, funding-side liquidity creation dampens housing markets. The relationships between liquidity creation activities and housing markets are stronger in regions with inelastic house supply, but flip when banks face external liquidity shocks. We also find that housing markets dominated by large banks are more sensitive to off-balance sheet liquidity creation activities. Finally, as expected, asset-side and off-balance sheet liquidity creations boost housing markets by driving house prices away from fundamental values. Our results offer a more thorough explanation of how bank liquidity creation fuels the momentum of housing markets.

scholarly journals International Real Estate Review

2017 ◽  
Vol 20 (2) ◽  
pp. 127-165
Author(s):  
Mohsen Bahmani-Oskooee ◽  
◽  
Seyed Hesam Ghodsi ◽  
Keyword(s):  
Household Income ◽  
House Prices ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Price Increases ◽  
Long Run ◽  
Short Run ◽  
Nonlinear Autoregressive ◽  
The U.S ◽  
Modelling Approach

When U.S. house prices were rising before the financial crisis of 2008, Case and Shiller (2003) argue that "income growth alone explains the pattern of recent home price increases in most states¨. Then can the decline in income after 2008 explain for the burst and abnormal decrease in house prices? Alternatively we ask whether the effects of income on house prices are symmetric or asymmetric. We employ quarterly data from each of the states in the U.S. and nonlinear autoregressive distributed lag modelling approach of Shin et al. (2014) to show that indeed, household income changes do have asymmetric effects on house prices in most of the states in the U.S. While adjustment asymmetry is borne out by the results in all states, asymmetric short-run impact is evidenced in 18 states and significant asymmetric long-run impact in 21 states.

Sign in / Sign up

Export Citation Format

Share Document