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62 posts on "Housing"

October 16, 2020

How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?



How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?

In this post we analyze consumer beliefs about the duration of the economic impact of the pandemic and present new evidence on their expected spending, income, debt delinquency, and employment outcomes, conditional on different scenarios for the future path of the pandemic. We find that between June and August respondents to the New York Fed Survey of Consumer Expectations (SCE) have grown less optimistic about the pandemic’s economic consequences ending in the near future and also about the likelihood of feeling comfortable in crowded places within the next three months. Although labor market expectations of respondents differ considerably across fairly extreme scenarios for the evolution of the COVID pandemic, the difference in other economic outcomes across scenarios appear relatively moderate on average. There is, however, substantial heterogeneity in these economic outcomes and some vulnerable groups (for example, lower income, non-white) appear considerably more exposed to the evolution of the pandemic.

Continue reading "How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?" »

August 18, 2020

Debt Relief and the CARES Act: Which Borrowers Benefit the Most?



Debt Relief and the CARES Act: Which Borrowers Benefit the Most?

COVID-19 and associated social distancing measures have had major labor market ramifications, with massive job losses and furloughs. Millions of people have filed jobless claims since mid-March—6.9 million in the week of March 28 alone. These developments will surely lead to financial hardship for millions of Americans, especially those who hold outstanding debts while facing diminishing or disappearing wages. The CARES Act, passed by Congress on April 2, 2020, provided $2.2 trillion in disaster relief to combat the economic impacts of COVID-19. Among other measures, it included mortgage and student debt relief measures to alleviate the cash flow problems of borrowers. In this post, we examine who could benefit most (and by how much) from various debt relief provisions under the CARES Act.

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July 08, 2020

Who Has Been Evicted and Why?



LSE_Who Has Been Evicted and Why?

More than two million American households are at risk of eviction every year. Evictions have been found to cause prolonged homelessness, worsened health conditions, and lack of credit access. During the COVID-19 outbreak, governments at all levels implemented eviction moratoriums to keep renters in their homes. As these moratoriums and enhanced income supports for unemployed workers come to an end, the possibility of a wave of evictions in the second half of the year is drawing increased attention. Despite the importance of evictions and related policies, very few economic studies have been done on this topic. With the exception of the Milwaukee Area Renters Study, evictions are rarely measured in economic surveys. To fill this gap, we conducted a novel national survey on evictions within the Housing Module of the Survey of Consumer Expectations (SCE) in 2019 and 2020. This post describes our findings.

Continue reading "Who Has Been Evicted and Why?" »

Posted by Blog Author at 7:15 AM in Credit, Housing | Permalink | Comments (0)

July 07, 2020

Introduction to Heterogeneity Series III: Credit Market Outcomes



Introduction to Heterogeneity Series III: Credit Market Outcomes

Average economic outcomes serve as important indicators of the overall state of the economy. However, they mask a lot of underlying variability in how people experience the economy across geography, or by race, income, age, or other attributes. Following our series on heterogeneity broadly in October 2019 and in labor market outcomes in March 2020, we now turn our focus to further documenting heterogeneity in the credit market. While we have written about credit market heterogeneity before, this series integrates insights on disparities in outcomes in various parts of the credit market. The analysis includes a look at differing homeownership rates across populations, varying exposure to foreclosures and evictions, and uneven student loan burdens and repayment behaviors. It also covers heterogeneous effects of policies by comparing financial health outcomes for those with access to public tuition subsidies and Medicare versus those not eligible. The findings underscore that a measure of the average, particularly relating to policy impact, is far from complete. Rather, a sharper picture of the diverse effects is essential to understanding the efficacy of policy.

Continue reading "Introduction to Heterogeneity Series III: Credit Market Outcomes" »

February 26, 2020

Did Subprime Borrowers Drive the Housing Boom?



Editor’s note: When this post was first published, the chart labels for “Non-Boom Counties” were incorrect; the labels have been corrected. (February 26, 12:00 pm)

Did Subprime Borrowers Drive the Housing Boom?

The role of subprime mortgage lending in the U.S. housing boom of the 2000s is hotly debated in academic literature. One prevailing narrative ascribes the unprecedented home price growth during the mid-2000s to an expansion in mortgage lending to subprime borrowers. This post, based on our recent working paper, “Villains or Scapegoats? The Role of Subprime Borrowers in Driving the U.S. Housing Boom,” presents evidence that is inconsistent with conventional wisdom. In particular, we show that the housing boom and the subprime boom occurred in different places.

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October 16, 2019

Optimists and Pessimists in the Housing Market



Optimists and Pessimists in the Housing Market

Given momentum in house prices over business cycles, research on consumer beliefs since the financial crisis has honed in on the potential importance of extrapolative beliefs—myopically assuming trends in asset prices will continue. Extrapolation is frequently cited as a central reason for excessively optimistic expectations about future asset prices, featuring prominently, for example, in the irrational exuberance narrative of Shiller. Other influential work since the Great Recession has emphasized the outsized role that extrapolative optimists can have in bubble formation. In this post, we look at how much dispersion there is in the amount of house price extrapolation and how consequential extrapolative beliefs could be for house price dynamics.

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Posted by Blog Author at 7:04 AM in Housing | Permalink | Comments (0)

May 22, 2019

Just Released: Press Briefing on the Evolution and Future of Homeownership



The New York Fed today held a press briefing on homeownership in the United States, in connection with its release of the 2019 Survey of Consumer Expectations Housing Survey. The briefing opened with remarks from New York Fed President John Williams, who provided commentary on the macroeconomic outlook and summarized the prospects for homeownership. He noted that the labor market remains very strong and that there seems to be little evidence of inflationary pressures, meaning that the economy is on a healthy growth path.

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Posted by Blog Author at 11:01 AM in Foreclosure, Household Finance, Housing, Mortgages | Permalink | Comments (0)

April 17, 2019

Did Tax Reform Raise the Cost of Owning a Home?



HOUSING SERIES: Post 5 of 5
LSE_2019_Did Tax Reform Raise the Cost of Owning a Home?

The 2018 slowdown in the housing market has been a subject of intense interest to the press and policymakers, including articles reporting a slowing in house price growth and a decline in home construction. Today we follow up on our colleagues’ research on whether the Tax Cut and Jobs Act of 2017 (TCJA) has contributed to a slowdown in the housing market, looking closely at what price signals tell us about the trade-off between owning and renting.

Continue reading "Did Tax Reform Raise the Cost of Owning a Home?" »

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

April 15, 2019

Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?



HOUSING SERIES: Post 4 of 5
LSE_2019_Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?

From the fourth quarter of 2017 through the third quarter of 2018, the average contract interest rate on new thirty-year fixed rate mortgages rose by roughly 70 basis points—from 3.9 percent to 4.6 percent. During this same period, there was a broad-based slowing in housing market activity with sales of new single-family homes declining by 7.6 percent while sales of existing single-family homes fell by 4.6 percent. Interestingly though, these declines in home sales were larger than in the two previous episodes when mortgage interest rates rose by a comparable amount. This post considers whether provisions in the Tax Cuts and Jobs Act of 2017 (TCJA) might have also contributed to the recent decline in housing market activity.

Continue reading "Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?" »

Posted by Blog Author at 7:00 AM in Banks, Credit, Household, Household Finance, Housing, Mortgages | Permalink | Comments (1)

April 12, 2019

The Sustainability of First-Time Homeownership



HOUSING SERIES: Post 3 of 5
LSE_2019_housing2-characteristics-first-time-buyer_lee_460_art

In this post we take up the important question of the sustainability of homeownership for first-time buyers. The evaluation of public policies aimed at promoting the transition of individuals from renting to owning should depend not only on the degree to which such policies increase the number of first-time buyers, but also importantly on whether these new buyers are able to sustain their homeownership. If a buyer is unprepared to manage the financial responsibilities of owning a home and consequently must return to renting, then the household may have made little to no progress in wealth accumulation. Despite the importance of sustainability, to date there have been no efforts at measuring the sustainability of first-time homeownership. We provide an example of a first-time homebuyer sustainability scorecard.

Continue reading "The Sustainability of First-Time Homeownership" »

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