Referred Articles
Journal of Housing Economics, Vol.12, Issue 4, December 2003, 273-356
In this study, we test for the role of credit quality as a factor in limiting access to homeownership. While micro-level household data on wealth and income are available for assessing income- and wealth-based constraints to homeownership, lack of data on household credit ratings has precluded evaluation of credit quality as a potential barrier to homeownership. The study, for the first time, measures the relative importance of credit-, income-, and wealth-based constraints and estimates how the effects of these constraints have evolved over the past decade. The results show that financing constraints continue to have an important impact on potential homebuyers. The wealth constraint has the largest impact, although its importance declined substantially during the 1990s. Credit quality based constraints have become more important barriers to homeownership during the 1990s, mostly reflecting an increase in the number of households with impaired credit quality. Thus, both wealth and credit constraints persist as barriers to the attainment of homeownership.
Texas Law Review, Vol. 88, Issue 2, December 2003, 413-419
Over the past decade, the growth of the secondary market has produced an increased differentiation in the pricing of available capital for mortgage lending, as well as in the brokers and lenders involved in the distribution of mortgages. A major outcome of this shift is the emergence of subprime lenders. This paper provides commentary on the views of price revelation and efficient mortgage markets.
Regional Science and Urban Economics, Vol. 33, Issue 5, September 2003, 517-556
The rate of homeownership among African-American households is considerably lower than white households in American urban areas. This paper examines whether racial differences in residential location outcomes are among the factors that contribute to the large racial differences in homeownership rates in major US metropolitan areas. Based on the 1985 metropolitan sample of the American Housing Survey for Philadelphia, the paper does not find any evidence that existing racial differences in residential location in Philadelphia decrease the homeownership rate among African Americans. Rather, the empirical evidence suggests that African-American residential location outcomes are associated with lower than expected racial differences in homeownership. Therefore, after controlling for neighborhood, racial differences in homeownership are larger than originally believed, and the ability of racial differences in endowments to explain homeownership differences is more limited.
Journal of Housing Economics, Vol. 12, No.1, March 2003, 29-59
In this study, we develop and test a methodology to assess the impact of affordable lending efforts on homeownership rates. More narrowly, we examine the impact of using flexible underwriting guidelines, primarily changes in the down payment and housing burden requirements, on the affordability and homeownership propensities of targeted populations and geographic areas. The impacts of changing these underwriting guidelines are compared with those resulting from lower borrowing costs (interest rates). A variation of the methodology first proposed by Wachter et al. (1996) is used in the analysis. We use the 1995 American Housing Survey (AHS) national core in the analysis. The findings indicate that affordable lending efforts are likely to increase homeownership opportunities for underserved populations, but that impacts may not be felt equally by all groups. Under most affordable products, the impacts on all households, recent movers and central city households are smaller than for other households. The recently introduced affordable products which permit the 3% down payment to come from non-borrower sources, e.g., Freddie Mac’s Alt 97, has the largest impact on the homeownership propensities of all underserved groups, including a 27.1% increase in the relative probability of homeownership for young households, a 21.0% increase for blacks, and a 15.0% increase for central city residents. Consistently, changes in underwriting guidelines are found to have greater impacts than changes in the costs of borrowing for all groups.
Journal of Affordable Housing and Community Development Law, Vol. 12, No.1, Winter 2002, 173-187
Cityscape: A Journal of Policy Development and Research, Vol.6, No 1, 2002, 9-84
This study analyzes the government-sponsored enterprises’ (GSEs’) mortgage purchase patterns over the period from 1993 through 1996 and focuses on their share of the secondary mortgage market in specific market segments identified by borrower income, borrower race, and other indicators of policy interest. Using a database on GSE loan purchases from HUD’s Public Use Database (PUDB) combined with data on non-GSE loan purchases reported under the Home Mortgage Disclosure Act in 44 of the largest metropolitan areas in the country, we provide a picture of GSE mortgage purchase patterns in a variety of urban areas. We report a series of cross-tabulations estimating the market share of each GSE by borrower and neighborhood characteristics, coupled with a logistic regression analysis on the influence of specific borrower and neighborhood characteristics on the probability that a given loan will be purchased by one of the GSEs. These analyses suggest that during the period covered by the study, Fannie Mae and Freddie Mac provided a lower proportion of funding for mortgage lending to lower income and minority borrowers than to higher income or White borrowers. The GSEs also had lower market shares in lower income neighborhoods than in higher income neighborhoods, in central-city areas compared to suburban areas, and in neighborhoods that are geographically targeted according to HUD’s mandates for GSE loan purchase activity compared to nontargeted neighborhoods. The logistic regressions further suggest that the GSEs were more likely to purchase loans in racially mixed tracts than in predominantly White tracts. Finally, we focus on spatial differences in GSE mortgage purchase patterns using clustering methods and find that GSE purchases differ in all included California metropolitan areas (along with Boston, Newark, New York, and Washington) compared with the rest of the metropolitan statistical areas (MSAs) studied. Loans made to borrowers with relatively high loan balances were less likely to be purchased by the GSEs in the California-plus metropolitan areas than in the remaining metropolitan areas. This may reflect the relatively high housing prices in the California-plus metropolitan areas. Because GSEs are prohibited from purchasing jumbo loans that exceed a conforming loan limit, they can be expected, other things being equal, to have a smaller market share in areas with higher housing prices because a larger share of loans can be expected to exceed the loan limit. Moreover, loans originated to minority borrowers are more likely to be purchased by the GSEs in the California-plus MSAs, a difference that may be attributable in part to the different mix of minority borrowers in the California MSAs, which have higher population proportions of Asian Americans compared to African Americans.
Journal of Real Estate Finance and Economics, Vol. 23, Issue 1, 2001
This paper examines anisotropic spatial autocorrelation in single-family house prices and in hedonic house price equation residuals using a spherical semivariogram and transactions data for one county in the Philadelphia, Pennsylvania MSA. Isotropic semivariograms model spatial relationships as a function of the distance separating properties in space. Anisotropic semivariograms model spatial relationships as a function of both the distance and the direction separating observations in space. The goals of this paper are: (1) to determine whether there is spatial autocorrelation in hedonic house price equation residuals; and (2) to empirically examine the validity of the isotropy assumption. We estimate the parameters of spherical semivariograms for house prices and for hedonic house price equation residuals for 21 housing submarkets within Montgomery County, Pennsylvania. These housing submarkets are constructed by dividing the county into 21 groupings of economically similar adjacent census tracts. Census tracts are grouped according to 1990 census tract median house prices and according to characteristics of the housing stock. We fit the residuals of each submarket hedonic house price equation to both isotropic and anisotropic sepherical semivariograms. We find evidence of spatial autocorrelation in the hedonic residuals in spite of a very elaborate hedonic specification. Additionally, we have determined that, in some submarkets, the spatial autocorrelation in the hedonic residuals is anisotropic rather than isotropic. The empirical results suggest that the spatial autocorrelation in Montgomery County single-family house price equation residuals is anisotropic in submarkets where residents typically commmute to a regional or local Central Businss District (CBD).
Cityscape: A Journal of Policy Development and Research, Vol.5, Issue 3, 2001
Cityscape: A Journal of Policy Development and Research, Vol. 5, Issue 2, 2001, 5-19
The 1990s were a tumultuous time for Federal housing policy. The decade began with deep divisions in the housing community over how to deliver housing assistance. Federal budget cuts in the mid-1990s, for the first time in recent history, essentially froze the number of households that received housing assistance. At roughly the same time, the continuing existence of HUD was itself in doubt, as the New York Times Magazine in 1995 published its lead article proclaiming “The Year That Housing Died.” As the new millennium begins, things have changed dramatically. Not only is Congress no longer seriously questioning whether to disband HUD, but in response to a record-setting economic expansion and internal reforms within the agency, Congress has substantially increased HUD ‘s budget. In marked contrast to the beginning of the last decade, remarkable consensus exists among housing policymakers and analysts over the future direction of housing policy. In this article, we explore this emerging consensus and set forth our views regarding the principles that should guide housing policy over the next decade.
Journal of Real Estate Finance and Economics, Vol. 20, Issue 2, 2000
The real estate industry has recently witnessed significant and pervasive consolidation with further growth and consolidation generally viewed as a foregone conclusion. For example, between 1990 and 1997, growth in average net real estate investments by large REITs outpaced growth in average net real estate investments by small REITs by 13 percent. However, no systematic study of the benefits of this consolidation exists. This research studies whether or not there are gains to consolidation due to economies of scale from size, brand imaging, and informational gains from geographic specialization. Our sample consists of 41 multifamily equity REITs, for whom finanical and property level data are available in the SNL REIT Database. Using this data, we construct ‘shadow’ portfolios that mimic each REIT’s exposure to changes in local market conditions. Our results show no size economies, that branding in real estate is allusive, and that geographic specialization, in agreement with Gyourko and Nelling (1993), has no significant benefit.
Real Estate Economics, Vol. 27, No.1, 1999
This study examines the performance of home purchase loans originated by a major depository institution in Philadelphia under a flexible lending program between 1988 and 1994. We examine long-term delinquency in relation to neighborhood housing market conditions, borrower credit history scores, and other factors. We find that likelihood of delinquency declines with the level of neighborhood housing market activity. Also, likelihood of delinquency is greater for borrowers with low credit history scores and those with high ratios of housing expense to income, and when the property is unusually expensive for the neighborhood where it is located.
Journal of Housing Economics, Vol 8, No. 2, 1999, 63-89
This paper presents new evidence on the determinants of the large disparities in home ownership by race in the U.S. Consistent with results first reported by P. Linneman and S. M. Wachter (1989,AREOFA J.7, No. 4, 389–402), we find noceteris paribusracial differences in ownership rates among white and minority households who possess sufficient wealth to meet down payment and closing cost requirements associated with standard mortgage underwriting criteria. However, substantial racial differences among wealth-constrained households exist, with constrained whites owning at higher rates than observationally equivalent minority households. Because minorities are disproportionately constrained by wealth-related underwriting standards, these differentials apply to roughly one-third of the white households in our samples and well over one-half of the minority sample. A multinomial model that treats central city versus suburban location as a choice variable in addition to tenure status is also estimated. The results show that even among households unconstrained by wealth-related underwriting considerations, minorities are much more likely than whites to own in central city locations. Thus, while controlling for wealth constraint status does eliminate tenure choice differences among the unconstrained, location differences remain for this group. They also are present among constrained households. Given the disparate fortunes of central city and suburban land markets in many metropolitan areas, this racial location pattern of ownership may have important long-run impacts on wealth distribution by race.