104 posts on "Housing"
April 15, 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 7.4 percent while sales of existing single-family homes fell by 4.4 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.
April 12, 2019
The Sustainability of First‑Time Homeownership
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 home buyer sustainability scorecard.
April 10, 2019
Who’s on First? Characteristics of First‑Time Homebuyers
In our previous post, we presented a new measure of first-time homebuyers. In this post, we use this improved measure to describe the characteristics of first-time buyers and how those characteristics change over time. Having an accurate assessment of first-time buyers is important given that the aim of many housing policies is to support the transition from renting to owning. A proper assessment of these housing policies requires an understanding of the impact of these policies on the share of first-time buyers and the characteristics of these buyers. Our third post will directly examine the sustainability of homeownership by first-time buyers.
April 8, 2019
A Better Measure of First‑Time Homebuyers
Much of the concern about affordable homeownership has focused on first-time buyers. These buyers, who are often making the transition from renting to owning, can find it difficult to save to meet down-payment requirements; this is particularly true in those areas where rent takes up a significant portion of a household’s monthly income. In contrast to first-time buyers, repeat buyers can typically rely on the equity in their current house to help fund the down payment on a trade-up purchase; they also have an easier time qualifying for a new mortgage if they’ve successfully made payments on a prior mortgage, thereby improving their credit score. Despite the policy focus on first-time buyers, reliable data on these buyers do not exist. In this initial post in a three-part series, we introduce a better measure of first-time buyers and examine the dynamics of this group over the past seventeen years. In our next post, we will describe the characteristics of first-time buyers. We will conclude the series by examining the sustainability of homeownership for first-time buyers.
June 25, 2018
How Is Technology Changing the Mortgage Market?
The adoption of new technologies is transforming the mortgage industry. For instance, borrowers can now obtain a mortgage entirely online, and lenders use increasingly sophisticated methods to verify borrower income and assets. In a recent staff report, we present evidence suggesting that technology is reducing frictions in mortgage lending, such as reducing the time it takes to originate a mortgage, and increasing the elasticity of mortgage supply. These benefits do not seem to come at the cost of less careful screening of borrowers.
May 17, 2018
Just Released: New York Fed Press Briefing Highlights Changes in Home Equity and How It’s Used
Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw At a press briefing this morning, economists at the New York Fed focused on the evolution of housing wealth and its use as collateral. Their comments came in connection with the Center for Microeconomic Data’s release of its Quarterly Report on Household Debt and […]
April 18, 2018
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.
April 11, 2018
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.
April 2, 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).
February 14, 2018
Landing a Jumbo Is Getting Easier
Andreas Fuster, James Vickery, and Akhtar Shah 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 […]
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