Can inflation cure mortgage debt overhang and mitigate the severity of housing busts? Focusing on the Great Recession, I address this question through the lens of a quantitative macroeconomic model of illiquid housing, endogenous mortgage pricing, and equilibrium default. First, I show that an...

This paper examines the mediating effect of the recent financial crisis on the relationship between house value fluctuation and households' liquid portfolio choice. To isolate exogenous variation in homeowners' home equity and mortgage debt before and after the crisis, I use a new regional level...

This paper studies a household's optimal demand for a reverse mortgage. These contracts allow homeowners to tap their home equity to finance consumption needs. In stylized frameworks, we show that the decision to enter a reverse mortgage is mainly driven by the dierential between the aggregate...

The special, dual nature of property as both a consumption and an investment goodmakes it salient for portfolio choice. In fact, the theoretical literature predicts a con-straint imposed by property on investment and the empirical literature has broughtevidence that this constraint, in some...

The confluence of three trends in the U.S. residential housing market - rising home prices, declining interest rates, and near-frictionless refinancing opportunities - led to vastly increased systemic risk in the financial system. Individually, each of these trends is benign, but when they occur...

We explore the effects of mandatory third-party review of mortgage contracts on the terms, availability, and performance of mortgage credit. Our study is based on a legislative experiment in which the State of Illinois required “high-risk” mortgage applicants acquiring or refinancing...

Die aktuellen Finanzmarktturbulenzen wurden durch Entwicklungen im Immobiliensektor ausgelöst. Vor diesem Hintergrund analysiert dieser Beitrag den Zusammenhang zwischen den Immobilienpreisen und der Geldmengen- und Kreditvolumensentwicklung für den Zeitraum 1992 -2006 (westdeutsche...

This paper explores the stability of the key conditioning variables accounting for real estate valuation before and after the crisis of 2008 - 2009, in a panel of 36 countries, for the period of 2005:I - 2012:IV, recognizing the incidence of global financial crisis. Our paper validates the...

A growing literature (i.e. Jaffee, Lynch, Richardson, and Van Nieuwerburgh, 2009, Acharya and Schnabl, 2009) argues that securitization improves financial stability if the securitized assets are held by capital market participants, rather than financial intermediaries. I construct a quantitative...

With regard to the recent US house price cycle, we analyze how the interaction between housing supply restrictions, mortgage credit constraints and a price-to-price feedback loop affects house price volatility. Considering 247 Metropolitan Statistical Areas, we estimate a simultaneous boom-bust...