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Working Paper
Fewer Vacants, Fewer Crimes? Impacts of Neighborhood Revitalization Policies on Crime
The relationship between neighborhood physical environment and social disorder, particularly crime, is of critical interest to urban economists and sociologists, as well as local governments. Over the past 50 years, various policy interventions to improve physical conditions in distressed neighborhoods have also been heralded for their potential to reduce crime. Urban renewal programs in the mid-20th century and public housing redevelopment in the 1990s both subscribed to the idea that signs of physical disorder invite social disorder. More recently, the federal Neighborhood Stabilization ...
Journal Article
Foreclosure Prevention Efforts Continue in Texas Metro Areas
Although the level of seriously delinquent mortgages in Texas is slightly improved from one year ago (see the accompanying article), such mortgages are still at very high levels in the metro areas. For example, over 30,000 households are at least 90 days delinquent on their mortgage in the four-county Dallas-Fort Worth metro area as of December 2010.
Working Paper
Crises in the Housing Market: Causes, Consequences, and Policy Lessons
The global financial crisis of the past decade has shaken the research and policy worlds out of their belief that housing markets are mostly benign and immaterial for understanding economic cycles. Instead, a growing consensus recognizes the central role that housing plays in shaping economic activity, particularly during large boom and bust episodes. This article discusses the latest research regarding the causes, consequences, and policy implications of housing crises with a broad focus that includes empirical and structural analysis, insights from the 2000's experience in the United ...
Discussion Paper
Distressed Residential Real Estate: Dimensions, Impacts, and Remedies
On October 5, 2012, the Federal Reserve Bank of New York and the Rockefeller Institute of Government co-hosted the conference ?Distressed Residential Real Estate: Dimensions, Impacts, and Remedies.? This post not only makes available a compendium of the findings of the conference, but also updates and extends some of the analysis presented. In particular, we look across states to assess the differential impacts of judicial and non-judicial processes to resolve the foreclosure crisis. Controlling for the peak percentage of loans that were seriously delinquent, we find that non-judicial states ...
Working Paper
The credit card debt puzzle: the role of preferences, credit risk, and financial literacy
We use the 1979 National Longitudinal Survey of Youth to revisit what is termed the credit card debt puzzle: why consumers simultaneously co-hold high-interest credit card debt and low-interest assets that could be used to pay down this debt. This dataset contains unique information on intelligence, financial literacy, and preferences, while also providing a complete picture of households? balance sheets. Relative to individuals with no credit card debt but positive liquid assets, individuals in the puzzle group have higher discount rates, slightly lower financial literacy scores, and very ...
Newsletter
On the Move: Mortgage Basics
Buying a home is a major financial decision, and for young people in particular the entire process can seem overwhelming. Learn about mortgages and the steps people can take early in life to prepare themselves financially to buy a home, in this February 2022 issue of Page One Economics: Focus on Finance.
Discussion Paper
If Prices Fall, Mortgage Foreclosures Will Rise
In our previous post, we illustrated the recent extraordinarily strong growth in home prices and explored some of its key spatial patterns. Such price increases remind many of the first decade of the 2000s when home prices reversed, contributing to a broad housing market collapse that led to a wave of foreclosures, a financial crisis, and a prolonged recession. This post explores the risk that such an event could recur if home prices go into reverse now. We find that although the situation looks superficially similar to the brink of the last crisis, there are important differences that are ...
Working Paper
A Shortage of Short Sales: Explaining the Underutilization of a Foreclosure Alternative
The Great Recession led to widespread mortgage defaults, with borrowers resorting to both foreclosures and short sales to resolve their defaults. I first quantify the economic impact of foreclosures relative to short sales by comparing the home price implications of both. After accounting for omitted variable bias, I find that homes selling as short sales transact at 9.2% to 10.5% higher prices on average than those that sell after foreclosure. Short sales also exert smaller negative externalities than foreclosures, with one short sale decreasing nearby property values by 1 percentage point ...
Report
Affordability and Availability of Rental Housing in the Third Federal Reserve District: 2015
In the aftermath of the foreclosure crisis and subsequent tightening of mortgage credit, many households have turned to the rental housing market, increasing pressure on an already limited supply of low-cost units. Using the most recent data available, this issue of Cascade Focus analyzes trends in rental housing affordability in the Third Federal Reserve District between 2007 and 2012. In addition to examining rates of housing cost burden for low-income renter households, this analysis evaluates whether the supply of affordable rental units is sufficient to meet the need. Lastly, this report ...
Working Paper
Mortgage-default research and the recent foreclosure crisis
This paper reviews recent research on mortgage default, focusing on the relationship of this research to the recent foreclosure crisis. Research on defaults was advanced both theoretically and empirically by the time the crisis began, but economists have moved the frontier further by improving data sources, building dynamic optimizing models of default, and explicitly addressing reverse causality between rising foreclosures and falling house prices. Mortgage defaults were also a key component of early research that pointed to subprime and other privately securitized mortgages as fundamental ...