Leverage and house-price dynamics in U.S. cities

House Price Beliefs and Mortgage Leverage Choice∗

We study the effects of homebuyers’ beliefs about future house price changes on their mortgage leverage choice. We show that, from a theoretical perspective, the relationship between homebuyers’ beliefs and their leverage choice is ambiguous, and depends on the magnitude of a “collateral adjustment friction” that reduces homebuyers’ willingness to adjust their house size in response to beliefs ...

Do Housing Bubbles Generate Fiscal Bubbles? Evidence From California Cities∗

This paper examines the effects of the most recent U.S. housing bubble on the fiscal policy of California cities. We use an instrumental variables approach that helps isolate fiscal consequences of house price appreciation by taking advantage of the influence of local topological constraints on the elasticity of house prices with respect to interest rates. Our analysis generates three main find...

Essays on Housing Supply and House Price Volatility

A typical U.S. family devotes about a quarter of its annual income and half or more of its net worth to housing. Both the level and volatility of house prices thus have important implications for household behavior and welfare, as well as for the aggregate U.S. economy. Recent research has emphasized the importance of housing supply in determining house prices in different U.S. markets. This di...

Unbiased Estimation of the Half-Life to Price Index Convergence among U.S. Cities

Cecchetti et al. (2002) estimate the half-life to price index convergence among U.S. cities to be approximately nine years. Although they correct for the small-sample bias in their panel estimate of the half-life, they do not adjust for biases that may potentially arise due to heterogeneity in the dynamic behavior of prices across cities, and time aggregation of price indices. This paper finds ...

Relative House Price Dynamics across Euro Area and Us Cities Convergence or Divergence?