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Student loans have soared in popularity over the past decade, with the aggregate student loan balance, as measured in the FRBNY Consumer Credit Panel, reaching $966 billion at the end of 2012. Student debt now exceeds aggregate auto loan, credit card, and home-equity debt balances—making student loans the second largest debt of U.S. households, following mortgages. Student loans provide critical access to schooling, given the challenge presented by increasing costs of higher education and rising returns to a degree. Nevertheless, some have questioned how taking on extensive debt early in life has affected young workers’ post-schooling economic activity.
An assiduous follower of the national house price charts that the New York Fed maintains on its web page may have noticed that we appear to be rewriting history as we update the charts every month. For example, last month we reported that the median twelve-month house price change across all counties for December 2012 was 3.68 percent. However, this month, we indicate that this same median change for December 2012 was instead 3.45 percent. Why the change? Was the earlier reported number a mistake that we simply corrected this month? If not, what explains the revision to the initial report?
Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert
van der Klaauw
This morning, New York Fed director of research Jamie McAndrews joined Bank
economists to brief
the press on economic developments.
With this morning’s release of the Quarterly
Report on Household Debt and Credit for 2012:Q4, the briefing focused
specifically on recent developments in household debt and credit.
Since the onset of the subprime crisis, many places across the United States have been affected by high levels of negative equity (meaning that borrowers owe more on their mortgages than their homes are worth), an associated flood of foreclosures, and loss of local wealth. In mid-2012, a community advisory firm, Mortgage Resolution Partners (MRP) approached the government of San Bernardino County, California (a region with particularly high levels of negative equity) and pitched the idea of using eminent domain to seize privately securitized mortgage loans in order to restructure or refinance them. The MRP proposal was largely based on a plan by Cornell University law professor Robert Hockett. In late January, this controversial plan
was abandoned by San Bernardino County, yet it remains under consideration in other counties. While a lot of the debate surrounding the plan has centered
on value judgments and legal issues, in this post we look at available data in
order to get an idea of the landscape of loans that could have been affected by
such a program in San Bernardino County.
U.S. households accumulated record-high levels of debt in the 2000s, and then began a process of deleveraging following the Great Recession and financial crisis. In some parts of the country, the rise and fall in household indebtedness was quite a bit sharper than in others. In this post, we highlight some of our research examining the magnitude of the recent credit cycle, and focus on how significant it’s been in New York State and northern New Jersey. Compared with the nation as a whole, we find that the region experienced a relatively mild credit cycle, although pockets of elevated household financial stress exist.
As of mid-December, the average thirty-year fixed-rate mortgage was near its historic low of about 3.3 percent, or half its level in August 2007 when financial turmoil began. However, yield declines in the mortgage-backed-securities (MBS) market, where bundles of mortgage loans are sold to investors, have been even more dramatic. In fact, all else equal, had these declines passed through to loan rates one-for-one, the average mortgage rate would now be around 2.6 percent. In this post, we summarize some of the findings from a workshop held at the New York Fed in early December aimed at better understanding the drivers behind the increased wedge between mortgage loan and MBS rates.
At today’s regional economic press briefing, we provided an update on housing conditions as well as an initial assessment of superstorm Sandy’s economic impact on the region.
Improving the ability of homeowners to take advantage of prevailing low mortgage rates by refinancing has remained an active topic of discussion. In a speech in January, New York Fed President Bill Dudley advocated for efforts “to see refinancing made more broadly available on a streamlined basis and with moderate fees to all prime conforming borrowers who are current on their payments.” In an earlier post, we argued that such a refinancing program would not represent a zero sum game between borrowers and investors; rather, it would yield net macroeconomic benefits.
In this post, we examine a number of important housing market “vital signs” that collectively help to indicate the health status of local markets at the county level. The post also serves as an introduction to a set of interactive maps, based on home price index data from CoreLogic, that we will regularly update on the New York Fed's website for readers interested in continuing to track the convalescence of the U.S. housing markets. The maps show the year-over-year change in home prices for nearly 1,200 counties through May and include a video sequence tracking these price changes since 2003.
In this post, we document the relationship between crime and house prices in the city of Rio de Janeiro, Brazil. One fully expects crime, as a public “bad,” to exert a downward force on prices; indeed, this is a common finding in the literature on amenity valuation. Our recent study quantifying this relationship is novel in its: (i) use of extremely detailed property price data for a large number of neighborhoods, (ii) application to a developing economy, and (iii) examination of the link between crime and reduced house-price inequality. We focus on the extent to which prices are responsive to crime-related outcomes, as demonstrated by a recent policy experiment and with the use of detailed offer-price data from the online classified website ZAP (www.ZAP.com.br). We find that prices are quite sensitive to falling crime, which implies large welfare gains due to crime reduction.
Liberty Street Economics features insight and analysis from economists working at the intersection of research and Fed policymaking.
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