The impacts of affordable lending efforts on homeownership rates

Quercia, Roberto G.; McCarthy, George W.; Wächter, Susan M.

doi:10.1016/s1051-1377(03)00004-4

Cited by 96 publications

(38 citation statements)

References 8 publications

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“…The negative relationship between household's credit quality constraints and the propensity to own is also well documented in the empirical literature (e.g. Linneman and Wachter 1989, Haurin et al 1997, Quercia et al 2003, and Barakova et al 2003 in the US, or Bourassa 1995, in Australia) 1 .…”

Section: Introductionmentioning

confidence: 72%

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

Díaz-Serrano

2005

Journal of Housing Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Forschungsinstitut zur Zukunft der ArbeitInstitute for the Study Barriers to homeownership have traditionally been an important research and policy issue. In particular, the role of income volatility and credit constraints have been one of the main focuses in this concern. In this paper we test for the first time whether the underlying nature behind the negative effect of income uncertainty on the owner-occupancy propensities is driven by risk aversion, as it is assumed in most of the theoretical models, or on the contrary it is driven by credit constraints. The former question emerges from the plausible assumption that households facing higher income volatility are also expected to face borrowing constraints. To disentangle this puzzle, we use an unusually rich data coming from the Italian Survey of Household Income and Wealth carried out by the Bank of Italy. Our results confirm that in Italy both labor income uncertainty and credit constraints exert a significant negative effect on the probability of homeownership. Our main findings indicate that the negative relationship between labor income uncertainty and the owner-occupancy propensities are just driven by households' risk aversion, while credit constraints play no role.JEL Classification: D1, R0, J0

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Section: Introductionmentioning

confidence: 72%

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

Díaz-Serrano

2005

Journal of Housing Economics

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“…However, the empirical literature finds that wealth constraints are more important than income constraints when purchasing a home. See for example Linneman, Megbolugbe, Watcher, and Cho (1997) or Quercia, McCarthy, and Watcher (2000). 20 These assumptions simplify the computation of the model, while allowing us to consider both down payment requirements and home equity loans without the need for modeling specific mortgage contracts or mortgage choice.…”

Section: Market Arrangementsmentioning

confidence: 99%

House prices and risk sharing

Hryshko

Luengo‐Prado

Sørensen

2010

Journal of Monetary Economics

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Are home owners better insured against calamities when house prices go up? We examine the impact of home ownership on nondurable consumption risk sharing, taking into account the dual role of housing as a shelter and as an asset with very special characteristics. Using data from the PSID we find that homeowners smooth consumption more than renters and consumption smoothing improves when houses appreciate in the area of residence. Next, we calibrate and simulate a model designed to match the main features of home ownership as captured by our empirical regression. We find that a suitably calibrated version of the model is able to reproduce the data quite well.

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“…See for example Linneman et al (1997) or Quercia et al (2000). 3 This assumption simplifies the computation of the model.…”

Section: Market Arrangementsmentioning

confidence: 99%

On the user cost and homeownership

Díaz

Luengo‐Prado

2008

Review of Economic Dynamics

117

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This paper studies the differences in the cost of housing services for renters and homeowners and calculates the bias that results when we value owner-occupied housing services using a rental equivalence approach. Our framework is a life-cycle model with endogenous tenure choice with households facing idiosyncratic uninsurable earnings risk and housing price risk. We model houses as illiquid assets that provide collateral for loans. To analyze the impact of preferential housing taxation on the tenure choice and the bias, we consider a tax system that mimics that of the US economy. Namely, owner-occupied housing services are not taxed and mortgage interest payments are deductible. Through simulations, we show that a rental equivalence approach (relative to a user cost approach) overestimates the cost of housing services. The magnitude of the bias is very sensitive to both the income tax rate and the size of adjustment costs in the housing market.JEL classification: E21; C80; E39

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The impacts of affordable lending efforts on homeownership rates

Cited by 96 publications

References 8 publications

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

House prices and risk sharing

On the user cost and homeownership

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