Do the GSEs matter to low-income housing markets? An assessment of the effects of the GSE loan purchase goals on California housing outcomes

Bostic, Raphael W.; Gabriel, Stuart A.

doi:10.1016/j.jue.2005.12.004

Cited by 44 publications

(29 citation statements)

References 16 publications

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“…The finding that low‐income markets have much higher house price idiosyncratic risk has important policy implications. For decades, the U.S. Government has been promoting homeownership, particularly among low‐income neighborhoods (see Ambrose and Thibodeau , Bostic and Gabriel , Jaffee, Quigley and Noll , for information on the GSE's Affordable Housing Goals). In contrast to the government's efforts, economists have done relatively little in understanding the welfare implications of homeownership of low‐income households from the perspective of asset price risk.…”

Section: Introductionmentioning

confidence: 99%

Idiosyncratic Risk of House Prices: Evidence from 26 Million Home Sales

Peng

Thibodeau

2016

Real Estate Economics

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This paper uses about 26 million home sales to measure house price idiosyncratic risk for 7,580 U.S. zip codes during three periods: (1) when the U.S. housing market was stable (1996–2000), (2) booming (2001–2007) and (3) busting (2007–2012), and investigates the determinants of house price risk. We find very strong relationships between risk and some basic housing market characteristics. There is a U‐shaped relationship between risk and zip‐code level median household income; risk is higher in zip codes with more appreciation volatility; and risk is not compensated with higher appreciation.

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Section: Introductionmentioning

confidence: 99%

Idiosyncratic Risk of House Prices: Evidence from 26 Million Home Sales

Peng

Thibodeau

2016

Real Estate Economics

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“…The existing literature finds little effect of affordable housing mandates on mortgage markets, although this has not convinced skeptics. Early examples of the literature finding no or negligible effects include Ambrose and Thibodeau (2004) and Bostic and Gabriel (2006); see also the literature cited therein. More recently, Bhutta (2012), Bolotnyy (2014) and Moulton (2014) use a regression discontinuity approach and study loans that the GSEs could purchase as whole loans.…”

Section: Uag Sag Lmigmentioning

confidence: 99%

Did Affordable Housing Legislation Contribute to the Subprime Securities Boom?

Ghent

Hernández-Murillo

Owyang

2015

Real Estate Economics

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We use a regression discontinuity approach and present new institutional evidence to investigate whether affordable housing policies influenced the market for securitized subprime mortgages. We use merged loan‐level data on nonprime mortgages with individual‐ and neighborhood‐level data for California and Florida. We find no evidence that lenders increased subprime originations or altered loan pricing around the discrete eligibility cutoffs for the Government‐Sponsored Enterprises' (GSEs) affordable housing goals or the Community Reinvestment Act. Although we find evidence that the GSEs bought significant quantities of subprime securities, our results indicate that these purchases were not directly related to affordable housing mandates.

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“…In addition, while they do find some evidence indicating that secondary market activities are associated with some increases in sales volumes, their analysis suggests that GSE purchase activities do not drive this relationship. Bostic and Gabriel (2006) empirically evaluate changes in the homeownership rate, vacancy rate, and median house value among GSE-targeted census tracts relative to changes in a control group of similar tracts. This research finds limited direct effects of affordable housing goal incentives on local housing market outcomes in California during the 1990s.…”

Section: Background and Theoretical Frameworkmentioning

confidence: 99%

“…These "affordable housing goals" have led the GSEs to increase their service to the targeted groups (see, for example, Listokin and Wyly 2000). However, evidence has tended to not show a direct impact of the goals and GSE purchase activities on credit access and homeownership (Ambrose and Thibodeau 2004;Bostic and Gabriel 2006). Thus, there is a seeming paradox: GSE activities in targeted communities have increased but there has been little measurable improvement in the access to credit and housing market conditions in these communities.…”

Section: Introductionmentioning

confidence: 99%