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50 posts on "Housing"

April 18, 2018

Just Released: Is Housing a Good Investment? Where You Stand Depends on Where You Sit



LSE_Just Released: Is Housing a Good Investment? Where You Stand Depends on Where You Sit

Home price growth expectations remained stable relative to last year, according to the Federal Reserve Bank of New York’s 2018 SCE Housing Survey. Respondents expect mortgage rates to rise over the next year, and perhaps as a result, the share of owners who expect to refinance their mortgages over the next year declined slightly. In addition, homeowners view themselves as more likely to make investments in their homes, and renters’ perceived access to mortgage credit has tightened somewhat. Although the majority of households continue to view housing as a good financial investment, there are some persistent and large differences across regions in the pervasiveness of this view, as this post will discuss.

Continue reading "Just Released: Is Housing a Good Investment? Where You Stand Depends on Where You Sit" »

Posted by Blog Author at 11:00 AM in Expectations, Housing | Permalink | Comments (0)

April 11, 2018

How Will the New Tax Law Affect Homeowners in High Tax States? It Depends



LSE_How Will the New Tax Law Affect Homeowners in High Tax States? It Depends

The Tax Cuts and Jobs Act of 2017 (TCJA) introduces significant changes to the federal income tax code for individuals and businesses. Several provisions of the new tax law are particularly significant for the owner‑occupied housing market. In this blog post, we compare the federal tax liability and the marginal after-tax cost of mortgage interest and property taxes under the old and new tax codes for a wide range of hypothetical recent home buyers in a high tax state. We find that impacts vary substantially along the income/home price distribution.

Continue reading "How Will the New Tax Law Affect Homeowners in High Tax States? It Depends" »

Posted by Blog Author at 7:00 AM in Fiscal Policy, Household Finance, Housing | Permalink | Comments (3)

April 02, 2018

Quantities and Prices during the Housing Bust



LSE_2018_Quantities and Prices during the Housing Bust

The recent U.S. housing crisis featured explosive growth and collapse of house prices at the national level, with substantial boom-bust pattern variation at the local level. What is less commonly known in the housing market is the behavior of housing quantities. While measures of supply and inventory play an important role in understanding markets, quantity data in housing is traditionally limited to national aggregates. Using a rich new data set of homes listed for sale across a wide range of U.S. housing markets, this post explores whether the collapse in prices from 2006 to 2009 owed more to a flood of houses on the market (higher supply) or a dearth of sales (lower demand).

Continue reading "Quantities and Prices during the Housing Bust" »

Posted by Blog Author at 7:00 AM in Crisis, Housing | Permalink | Comments (0)

February 14, 2018

Landing a Jumbo Is Getting Easier



LSE_2018_Landing a Jumbo Is Getting Easier

The United States relies heavily on securitization for funding residential mortgages. But for institutional reasons, large mortgages, or “jumbos,” are more difficult to securitize, and are instead usually held as whole loans by banks. How does this structure affect the pricing and availability of jumbo mortgages? In this post we show that the supply of jumbo mortgages has improved in recent years as banks have become more willing to take on mortgage credit risk on their own balance sheets.

Continue reading "Landing a Jumbo Is Getting Easier" »

Posted by Blog Author at 7:00 AM in Credit, Household Finance, Housing, Mortgages | Permalink | Comments (2)

February 13, 2018

Just Released: Great Recession’s Impact Lingers in Hardest-Hit Regions



LSE_2018_Just Released: Great Recession’s Impact Lingers in Hardest-Hit Regions

The New York Fed’s Center for Microeconomic Data today released our Quarterly Report on Household Debt and Credit for the fourth quarter of 2017. Along with this report, we have posted an update of state-level data on balances and delinquencies for 2017. Overall aggregate debt balances increased again, with growth in all types of balances except for home equity lines of credit. In our post on the first quarter of 2017 we reported that overall balances had surpassed their peak set in the third quarter of 2008—the result of a slow but steady climb from several years of sharp deleveraging during the Great Recession.

Continue reading "Just Released: Great Recession’s Impact Lingers in Hardest-Hit Regions" »

August 23, 2017

At the New York Fed: The Appropriate Government Role in U.S. Mortgage Markets



While the U.S. mortgage finance system was at the center of the recent financial crisis, it remains largely untouched by legislative reforms. At the center of these conversations are Fannie Mae and Freddie Mac—both of which were placed into federal conservatorship in September 2008. Now, nearly nine years later, the fate of these two government-sponsored enterprises (GSEs) and the prospect of related changes to the mortgage finance system are once again a focus of policy discussion. In this post, we summarize the main themes of a recent New York Fed workshop where policymakers, academics, and practitioners gathered to consider the future structure of the U.S. housing finance system.

Continue reading "At the New York Fed: The Appropriate Government Role in U.S. Mortgage Markets" »

Posted by Blog Author at 7:00 AM in Housing, Mortgages | Permalink | Comments (0)

March 29, 2017

QE Frictions: Could Banks Have Favored Refinancing over New Purchase Borrowing?



LSE_QE Frictions: Could Banks Have Favored Refinancing over New Purchase Borrowing?

Quantitative easing (QE)—the Federal Reserve’s effort to provide policy accommodation lowering long-term interest rates at a time when the federal funds rate was near its lower bound—has generated a great deal of research, both about its impact and about the frictions that might limit that impact. For example, this recent study finds that weak competition in local mortgage markets limited the pass-through from QE to mortgage rates for borrowers, and another study suggests that QE expanded banks’ mortgage lending while crowding out their commercial lending. In this post, we look into a different friction—whether banks’ limited risk-taking capacity after the crisis led them to favor refinance mortgages over new mortgage originations.

Continue reading "QE Frictions: Could Banks Have Favored Refinancing over New Purchase Borrowing?" »

Posted by Blog Author at 7:00 AM in Financial Institutions, Housing, Monetary Policy | Permalink | Comments (2)

February 17, 2017

A Close Look at the Decline of Homeownership



LSE_A Close Look at the Decline of Homeownership

The homeownership rate—the percentage of households that own rather than rent the homes that they live in—has fallen sharply since mid-2005. In fact, in the second quarter of 2016 the homeownership rate fell to 62.9 percent, its lowest level since 1965. In this blog post, we look at underlying demographic trends to gain a deeper understanding of the large increase in the homeownership rate from 1995 to 2005 and the subsequent large decline. Although there is reason to believe that the homeownership rate may begin to rise again in the not-too-distant future, it is unlikely to fully recover to its previous peak levels. This is a disconcerting finding for those who view homeownership as an integral part of the American Dream and a key component of income security during retirement.

Continue reading "A Close Look at the Decline of Homeownership" »

Posted by Blog Author at 7:02 AM in Demographics, Housing | Permalink | Comments (2)

February 16, 2017

The Homeownership Gap Is Finally Closing



LSE_The Homeownership Gap Is Finally Closing

The homeownership rate peaked at 69 percent in late 2004. By the summer of 2016, it had dropped below 63 percent—exactly where it was when the government started reporting these data back in 1965. The housing bust played a central role in this decline. We capture this effect through what we call the homeownership gap—the difference between the official homeownership rate and the “effective” rate where only homeowners with positive equity in their house are counted. The effective rate takes into account that a borrower does not in an economic sense own the house if the mortgage debt is greater than the house’s value. In this post, we show that between 2005 and 2012, the effective rate fell well below, and put downward pressure on, the official rate. We also demonstrate that the increase in house prices and the exit of millions of homeowners through foreclosure has largely eliminated the gap between the official and effective homeownership rates.

Continue reading "The Homeownership Gap Is Finally Closing" »

Posted by Blog Author at 7:00 AM in Foreclosure, Household Finance, Housing | Permalink | Comments (0)

February 14, 2017

The Evolution of Home Equity Ownership



LSE_The Evolution of Home Equity Ownership

In yesterday’s post, we discussed the extreme swings that household leverage has taken since 2005, using combined loan-to-value (CLTV) ratios for housing as our metric. We also explored the risks that current household leverage presents in the event of a significant downturn in prices. Today we reverse the perspective, and consider housing equity—the value of housing net of all debt for which it serves as collateral. For the majority of households, housing equity is the principal form of wealth, other than human capital, and it thus represents an important form of potential collateral for borrowing. In that sense, housing equity is an opportunity in the same way that housing leverage is a risk. It turns out that aggregate housing equity at the end of 2015 was very close, in nominal terms, to its pre-crisis (2005) level. But housing wealth has moved to a different group of people—made up of people who are older and have higher credit scores than a decade ago. In today’s post, we look at the evolution of housing equity and its owners.

Continue reading "The Evolution of Home Equity Ownership" »

Posted by Blog Author at 7:00 AM in Household Finance, Housing, Inequality | Permalink | Comments (0)
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Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

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