scholarly journals To Buy or Not to Buy: Consumer Constraints in the Housing Market

2016 ◽  
Vol 106 (5) ◽  
pp. 636-640 ◽  
Author(s):  
Andreas Fuster ◽  
Basit Zafar
Keyword(s):  
Housing Market ◽  
Household Survey ◽  
Financing Constraints ◽  
Home Equity ◽  
Financial Situation

We use a strategic household survey to study the sensitivity of intended homeownership decisions to financing constraints. We find that the average stated likelihood of buying a home is strongly sensitive to the size of the required down payment, which we vary exogenously across three scenarios. This sensitivity is particularly high for respondents that appear more liquidity constrained based on observable characteristics (including current renters, or owners with low savings or low home equity). For renters, expectations of future rent inflation and of improvements to their personal financial situation also predict intention to buy.

Financing Constraints, Home Equity and Selection into Entrepreneurship

2021 ◽  
Author(s):  
Thais Laerkholm Jensen ◽  
Soren Leth-Petersen ◽  
Ramana Nanda
Keyword(s):  
Financing Constraints ◽  
Home Equity

scholarly journals Financial situation and social support received by families with children in Ulyanovsk oblast

POPULATION ◽  
2020 ◽  
Vol 23 (1) ◽  
pp. 39-52
Author(s):  
Elena E. Grishina
Keyword(s):  
Social Support ◽  
Significant Proportion ◽  
Household Survey ◽  
Poverty Rate ◽  
Social Benefits ◽  
Financial Situation ◽  
Poor Households ◽  
Ulyanovsk Oblast ◽  
Households With Children ◽  
Families With Children

The aim of this work is to analyze the financial situation and the level of social support received by families with children in Ulyanovsk oblast on the basis of the data from household survey conducted in Ulyanovsk oblast. The study showed that the poverty rate among the surveyed households with children under 18 is significantly higher than the total poverty rate among the households. Many families with children cannot afford buying goods and services they need. In order to maintain their consumption level, a significant proportion of families with children have to take out loans. Analysis of the survey data shows that the coverage of families with children by social benefits is quite high. At the same time, even among the poor households with children, one quarter of households does not receive any social benefits. The surveyed families with children noted difficulties faced by them in obtaining information about social benefits and in collecting necessary documents, long waiting in queues when applying for benefits. The calculations show that provision of regional benefits, including targeted regional benefits, reduces the poverty rate among households with children only slightly. In general, regional benefits are more likely to reduce the extreme poverty of household with children. The analysis presented in the article allows determining possible directions for improving the social support system in Ulyanovsk oblast.

Losses on Dutch residential mortgage insurances

2014 ◽  
Vol 7 (3) ◽  
pp. 307-326 ◽  
Author(s):  
M.K. Francke ◽  
F.P.W. Schilder
Keyword(s):  
Housing Market ◽  
Loss Probability ◽  
Mortgage Default ◽  
Home Equity ◽  
Current Crisis ◽  
Data Set ◽  
Content Type ◽  
Mortgage Insurance ◽  
Dutch Housing ◽  
The Impact

Purpose – This paper aims to study the data on losses on mortgage insurance in the Dutch housing market to find the key drivers of the probability of loss. In 2013, 25 per cent of all Dutch homeowners were “under water”: selling the property will not cover the outstanding mortgage debt. The double-trigger theory predicts that being under water is a necessary but not sufficient condition to predict mortgage default. A loss for the mortgage insurer is the result of a default where the proceedings of sale and the accumulated savings for postponed repayment of the principal associated to the loan are not sufficient to repay the loan. Design/methodology/approach – For this study, the authors use a data set on losses on mortgage insurance at a national aggregate level covering the period from 1976 to 2012. They apply a discrete time hazard model with calendar time- and duration-varying covariates to analyze the relationship between year of issue of the insurance, duration, equity, unfortunate events like unemployment and divorce and affordability measures to identify the main drivers of the probability of loss. Findings – Although the number of losses increases over time, the number of losses relative to the active insurance is still low, despite the fact that the Dutch housing market is the world’s most strongly leveraged housing market. On average, the peak in loss probability lies around a duration of four years. The average loss probability is virtually zero for durations larger than 10 years. Mortgages initiated just prior to the beginning of the financial crisis have an increased loss probability. The most important drivers of the loss probability are home equity, unemployment and divorce. Affordability measures are less important. Research limitations/implications – Mortgage insurance is available for the lower end of the market only and is intended to decrease the impact of risk selection by banks. The analysis is based on aggregate data; no information on individual households, like initial loan-to-value and price-to-income ratios; current home equity; and unfortunate events, like unemployment and divorce, is available. The research uses averages of these variables per calendar year and/or duration. Information on repayments of insured mortgages is missing. Originality/value – This paper is the first to describe the main drivers of losses on insured mortgages in The Netherlands by using loss data covering two housing market crises, one in the early 1980s and the current crisis that started in 2008. Much has changed between the two crises. For instance, prices have risen steeply as has household indebtedness. Furthermore, alternative mortgage products have increased in popularity. Focusing a study on the drivers of mortgage losses exclusively on the current crisis could therefore be biased, given the time-specific circumstances on the housing market.

scholarly journals The Heightened ‘Security Zone’ Function of Gated Communities during the COVID-19 Pandemic and the Changing Housing Market Dynamic: Evidence from Beijing, China

Land ◽  
2021 ◽  
Vol 10 (9) ◽  
pp. 983
Author(s):  
Ling Li ◽  
Wayne Xinwei Wan ◽  
Shenjing He
Keyword(s):  
Housing Market ◽  
Urban Form ◽  
Large Scale ◽  
Housing Prices ◽  
Household Survey ◽  
Gated Communities ◽  
Urban China ◽  
Urban Life ◽  
Control Measures ◽  
Perceived Security

The ongoing COVID-19 pandemic has left a strong imprint on many aspects of urban life. Gated communities (GCs) in China are less commonly perceived as a negative and segregated urban form of community compared to other contexts, owing to their wide variety and relative openness. Yet, the enhanced security zone function and the popularity of GCs, along with the heightened segregation and exclusion effects, mean they are most likely to emerge in post-pandemic urban China because of the perceived effectiveness of GCs in preventing health risks by excluding outsiders during the pandemic. Drawing on empirical data from Beijing, this research presents strong evidence for a strengthened perceived ‘security zone’ effect of GCs during the pandemic. Given that rigid pandemic control measures were organized at the community level, a large-scale household survey in Beijing suggests that residents commonly recognise the effectiveness of GCs in security control and show a strong preference for GCs over open communities after the pandemic, even though there is a lack of direct evidence of reduced COVID-19 risk in GCs. The heightened perceived ‘security zone’ function of GCs has shown a significant impact on the housing market, evidenced by an increase of 2% in the housing prices for GCs, compared with those of open communities. The rising popularity of GCs is also evidenced by a significant increase in property viewings by potential homebuyers and smaller price discounts in actual transactions in gated communities vis-à-vis open communities. We argue that the rising risk-averse sentiment in the post-pandemic era has given rise to the popularity of GCs. This study provides timely and fresh insights into the changing meaning of GCs in post-pandemic China.

scholarly journals Navigating the Turbulent Economic Waters of the 2007 Great Recession and the Crash of the Housing Market

10.28945/3947 ◽  
2018 ◽  
Vol 2 ◽  
pp. 001-019
Keyword(s):  
Housing Market ◽  
Great Depression ◽  
Great Recession ◽  
Economic Downturn ◽  
Home Equity ◽  
Economic Activities ◽  
The Great Recession ◽  
The Great Depression ◽  
Economic Production ◽  
The U.S

What triggered the crash of the U.S. housing market? This analysis looks at the economic and industry forces that led to an economic downturn that put as many as half of all U.S. residential builders out of business. Since the Great Depression, the U.S. housing market has significantly influenced economic production and employment levels. Direct and indirect investments in the housing industry, along with the induced economic activities such as real estate transactions and construction as well as other factors, accounted for an estimated 15-20% of GDP during boom years (CBPP, 2012). The burst of the $8 trillion housing bubble in 2007 and the subsequent collapse of the financial markets in 2008 created massive disarray in homebuilding (Bivens, 2011). As many as 50% of homebuilders closed their doors, either voluntarily or through bankruptcy filings (Quint, 2015). Concurrently, from 2006 through 2012, the Great Recession resulted in the loss of over $7 trillion of home equity (Gould Ellen, 2012). Over 24 percent of home mortgages went “underwater” with balances exceeding home values (Carter & Gottschalck, n.d.). For some homeowners, the unfortunate thought of losing their homes through foreclosure and incurring disruption to family life became a reality. The stress from threats of the loss of a home, unemployment, and depletion of savings exacted a great toll on many. Not since the Great Depression has the U.S. economy faced forces so devastating to the housing market and personal wealth.

Equity induced up-trading and the housing market structure

2014 ◽  
Vol 7 (2) ◽  
pp. 204-217 ◽  
Author(s):  
Trond-Arne Borgersen
Keyword(s):  
Market Structure ◽  
Housing Market ◽  
House Price ◽  
Market Model ◽  
Future Research ◽  
Home Equity ◽  
Market Segments ◽  
Content Type ◽  
Price Effects ◽  
Short Run

Purpose – The purpose of this paper is to highlight the importance of home equity and the interplay between market segments for housing market developments. The intention is to show that it is not only the aggregate equity gain but also the distribution of equity gains between segments that matter for how shocks to income impact house prices. Design/methodology/approach – The paper sets out a linear housing market model with three segments. Households trade up a housing ladder and link the three segments for owner-occupied housing. The up-trading is equity-induced. An expression for the house price index, which is related to the market segment prices both directly through the segment size and indirectly through a segment position on the housing ladder is derived. The author considers the price effects of shocks to income in four housing market regimes. Findings – The heterogeneous housing market model shows how the interplay between segments impacts housing markets. When considering shocks to income, short-run deviations in the price-to-income (PTI) ratio compared to their long-run equilibrium due to equity-induced up-trading were found. The extent of PTI overshooting is related to the intensity of equity-induced up-trading between different segments. The market structure necessary to eliminate such overshooting is contingent on the distribution of equity gains between segments. Finally, the paper shows how the price effects of macroprudential interventions might be non-negligible when indirect effects are taken into account. Originality/value – The linear housing market model with three market segments introduces a framework where the intensity of equity-induced up-trading in different market segments can be analyzed. This distributional aspect is, to the best of the author's knowledge, novel. The context-specific relation between housing market structure, equity-induced up-trading and short-run deviations in the PTI ratio provides a foundation for future research.

Consumer Credit & the Housing Market: An Examination of Trends in Home Equity Lines of Credit

2012 ◽  
Author(s):  
Norbert J. Michel ◽  
John Phillip Lajaunie ◽  
Shari Lawrence ◽  
Ronnie Fanguy
Keyword(s):  
Housing Market ◽  
Consumer Credit ◽  
Home Equity ◽  
Lines Of Credit

Financing constraints, home equity and selection into entrepreneurship

2021 ◽  
Author(s):  
Thais Laerkholm Jensen ◽  
Søren Leth-Petersen ◽  
Ramana Nanda
Keyword(s):  
Financing Constraints ◽  
Home Equity

scholarly journals Liquidity Constraints in the U.S. Housing Market

2021 ◽  
Author(s):  
Corina Boar ◽  
Denis Gorea ◽  
Virgiliu Midrigan
Keyword(s):  
Life Cycle ◽  
Housing Market ◽  
Liquidity Constraints ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Home Equity ◽  
Welfare Gains ◽  
The U.S

Abstract We study the severity of liquidity constraints in the U.S. housing market using a life-cycle model with uninsurable idiosyncratic risks in which houses are illiquid, but agents can extract home equity by refinancing their mortgages. The model implies that four-fifths of homeowners are liquidity constrained and willing to pay an average of 13 cents to extract an additional dollar of liquidity from their home. Most homeowners value liquidity for precautionary reasons, anticipating the possibility of income declines and the need to make mortgage payments. The model reproduces well the observed response of consumption to tax rebates and mortgage relief programs and predicts large welfare gains from policies aimed at providing temporary liquidity relief to homeowners.

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