House Price Fluctuations: The Role of Housing Wealth as Borrowing Collateral

2013 ◽  
Vol 95 (4) ◽  
pp. 1183-1197 ◽  
Author(s):  
Daniel Cooper
Keyword(s):  
House Price ◽  
Housing Wealth ◽  
Price Fluctuations

scholarly journals More Reliable Land Price Index: Is There a Slope Effect?

Land ◽  
2021 ◽  
Vol 10 (3) ◽  
pp. 261
Author(s):  
Yi Huang ◽  
Geoffrey Hewings
Keyword(s):  
Land Use ◽  
Price Index ◽  
House Price ◽  
Land Values ◽  
Price Indices ◽  
Land Price ◽  
House Price Indices ◽  
Physical Attributes ◽  
Constant Quality

This paper focuses on the physical attributes of land that intrinsically limit land use and possibly affect land values. In particular, we investigate if the slope of a land does decrease its price and investigate the role of land slope in forming more reliable constant-quality land price indices and aggregate house price indices. We find that, while land slopes do decrease the land price per unit, they have a small effect on the quality-adjusted land price indices in selected neighborhoods in Auckland, New Zealand, where sloped terrain is common.

scholarly journals Accuracy of Households’ Dwelling Valuations, Housing Demand and Mortgage Decisions: Israeli Case

2021 ◽  
Author(s):  
Alla Koblyakova ◽  
Larisa Fleishman ◽  
Orly Furman
Keyword(s):  
Academic Research ◽  
House Price ◽  
Housing Demand ◽  
Empirical Estimation ◽  
Cross Sectional ◽  
Price Expectations ◽  
Housing Services ◽  
House Price Expectations ◽  
Supply Side Factors

AbstractHousing policy, as well as academic research, are increasingly concerned with the role of bias in subjective dwelling valuations as a proximate measure of households’ house price expectations and their relationship with housing demand. This paper contributes to this area of study by exploring the possibility of simultaneous relationships between households’ price expectations and incentive to maximise the size of housing services demanded also accounting for the supply side factors and regional perspective. The empirical estimation takes the form of a system of a two simultaneous equations model applying two stage least squares estimation technique. Cross sectional estimations utilise data extracted from the Israeli Longitudinal Panel Survey (LPS) data. Applying the best available proxy for households’ price expectations, calculated as the ratio between subjective dwelling valuations (LPS) and the estimated market value of the same properties, research has identified the interrelated factors that simultaneously influence householders’ price expectations and housing demand. Results offer conceptual and empirical advantages, highlighting the imperfect nature of the housing market, as reflected by the inseparability of bias in subjective valuations and housing decisions.

scholarly journals Saving Behavior and Housing Wealth Evidence from German Micro Data

2018 ◽  
Vol 238 (6) ◽  
pp. 501-539
Author(s):  
Sören Gröbel ◽  
Dorothee Ihle
Keyword(s):  
House Prices ◽  
House Price ◽  
Wealth Effect ◽  
Housing Wealth ◽  
Price Shocks ◽  
Household Level ◽  
Underlying Causes ◽  
Saving Behavior ◽  
Housing Wealth Effect ◽  
Important Position

Abstract Housing property is the most important position in a household’s wealth portfolio. Even though there is strong evidence that house price cycles and saving patterns behave synchronously, the underlying causes remain controversial. The present paper examines if there is a wealth effect of house prices on savings using household-level panel data from the German Socio-Economic Panel for the period 1996-2012. We find that young homeowners decrease their savings in response to unanticipated house price shocks, whereas old households hardly respond to house price changes. Although effects are relatively low in magnitude, we interpret this as evidence of a housing wealth effect.

scholarly journals Aging in Place, Housing Maintenance, and Reverse Mortgages

2019 ◽  
Vol 87 (4) ◽  
pp. 1799-1836 ◽  
Author(s):  
João F Cocco ◽  
Paula Lopes
Keyword(s):  
Aging In Place ◽  
The Elderly ◽  
Cash Flows ◽  
Housing Wealth ◽  
Reverse Mortgages ◽  
The Government ◽  
Saving Decisions ◽  
Pareto Improving ◽  
The Impact

Abstract We study the role of housing wealth in financing retirement consumption. In our model retirees: 1. derive utility benefits from remaining in their home (aging in place); and 2. choose in each period whether to maintain their house. The evidence that we present shows that these features are important in explaining the saving decisions of the elderly. The costs and the maintenance requirement of reverse mortgages (RMs) reduce (or eliminate) the benefits of the loans for retirees who wish to do less maintenance. We evaluate the impact of different loan features on retirees’ utility, cash-flows to lenders, and to the government agency that provides mortgage insurance. We show that combining RMs with insurance against a forced home sale (e.g. due to a move to a nursing home) is Pareto improving and can lead to increased demand for the loans due to product complementarities.

scholarly journals Housing Wealth Effects: The Long View

2020 ◽  
Author(s):  
Adam M Guren ◽  
Alisdair McKay ◽  
Emi Nakamura ◽  
Jón Steinsson
Keyword(s):  
House Prices ◽  
House Price ◽  
Ordinary Least Squares ◽  
Wealth Effects ◽  
Housing Wealth ◽  
Income Risk ◽  
New Instrument ◽  
Housing Wealth Effect ◽  
Housing Wealth Effects ◽  
Standard Life

Abstract We provide new time-varying estimates of the housing wealth effect back to the 1980s. We use three identification strategies: ordinary least squares with a rich set of controls, the Saiz housing supply elasticity instrument, and a new instrument that exploits systematic differences in city-level exposure to regional house price cycles. All three identification strategies indicate that housing wealth elasticities were if anything slightly smaller in the 2000s than in earlier time periods. This implies that the important role housing played in the boom and bust of the 2000s was due to larger price movements rather than an increase in the sensitivity of consumption to house prices. Full-sample estimates based on our new instrument are smaller than recent estimates, though they remain economically important. We find no significant evidence of a boom–bust asymmetry in the housing wealth elasticity. We show that these empirical results are consistent with the behaviour of the housing wealth elasticity in a standard life-cycle model with borrowing constraints, uninsurable income risk, illiquid housing, and long-term mortgages. In our model, the housing wealth elasticity is relatively insensitive to changes in the distribution of loan-to-value (LTV) for two reasons: first, low-leverage homeowners account for a substantial and stable part of the aggregate housing wealth elasticity; second, a rightward shift in the LTV distribution increases not only the number of highly sensitive constrained agents but also the number of underwater agents whose consumption is insensitive to house prices.

Industrial Restructuring and Change in the Labour and Property Markets in Britain

1982 ◽  
Vol 14 (6) ◽  
pp. 745-763 ◽  
Author(s):  
D C Thorns
Keyword(s):  
Labour Market ◽  
House Price ◽  
Work Force ◽  
Strong Relationship ◽  
High Rate ◽  
Industrial Restructuring ◽  
Class Structure ◽  
Property Markets ◽  
Tenure Structure

This paper seeks to identify the interrelationships between the labour and property markets and the role of regions and the local state in Britain in order to assess their effects upon the structure of opportunities. The labour market changes over the postwar period have resulted in labour shedding in the older heavy industries and in mining and quarrying, leading to changes both in the composition and in the location of the work force. During the same period there have been major changes in the tenure structure of housing with the growth of owner occupation. There is a strong relationship between the areas which have a buoyant labour market and those which have a high rate of house price increase. The implications of these changes in the labour and property markets are examined in relation to mobility and class structure.

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