Using unique real estate data that allow for accurately-measured capital gains, we examine whether sell propensities depend on the magnitude of a seller's capital gain. We find that short-term sell propensities are flat over losses and increasing in gains. Consistent with their higher sell...

This paper shows that households' mortgage refinancing decisions suboptimally depend on uninformative reference points, imposing a friction to the refinancing channel of monetary policy. I study refinancing behavior in the UK, where on pre-determined dates initial fixed rates reset and...

In a world with complete markets, the decision whether to rent or buy a home is not influenced by risks related to human capital. If markets are incomplete and have frictions, however, this may change. Renting should become more likely the more mobile a household has to be and the more income...

Home Equity Conversion Mortgage (HECM) data seem to confirm two concerns about these federally insured loans offered to older US homeowners. First, originations are rare, consistent with a familiar disinterest in extracting home equity through sale among older owners, even those with low wealth....

The correlation between stock and housing prices, which is critical for household asset allocations, varies widely by metropolitan area and country. A general equilibrium model demonstrates that an aggregate positive technology shock increases stock prices and housing demand but can decrease...

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...

We study the link between homeownership, mortgage debt, and entrepreneurship using a model of occupational choice and housing tenure where homeowners commit to mortgage payments. Our model predicts that, as long as mortgage rates exceed the rate of interest on liquid wealth: (i) mortgage debt,...

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...

Using Japanese household micro survey data during 2000-2015, this paper examines the effects of housing on household stock holdings. To disentangle the effect of housing asset (land value) and mortgage debt on households' portfolio share of stocks out of liquid financial assets, we apply the...

Households systematically overvalue or undervalue their houses. We compute house value misperception as the difference between self-reported and market house values. Misperception is sizable, countercyclical, and persistent. We find that a 1 percent increase in house overvaluation results, on...