An econometric analysis of borrowing constraints and household debt

Consumer credit

Gentrification and Neighborhood Housing Cycles: Will America’s Future Downtowns Be Rich?

This paper identifies a new factor, the age of the housing stock, that affects where high- and low-income neighborhoods are located in U.S. cities. High-income households, driven by a high demand for housing services, will tend to locate in areas of the city where the housing stock is relatively young. Because cities develop and redevelop from the center outward over time, the location of these neighborhoods varies over the city’s history. The model predicts a suburban location for the rich in an initial period, when young dwellings are found only in the suburbs, while predicting eventual gentrification once central redevelopment creates a young downtown housing stock. Empirical work indicates that if the influence of spatial variation in dwelling ages were eliminated, longstanding central city/suburban disparities in neighborhood economic status would be reduced by up to 50 percent. Model estimates further predict that between 2000 and 2020, central-city/suburban differences in economic status will widen somewhat in smaller cities but narrow sharply in the largest American cities as they become more gentrified.

The geography of entrepreneurship in the New York metropolitan area

This article was presented at a conference organized by the Federal Reserve Bank of New York in April 2005, "Urban Dynamics in New York City." The goal of the conference was threefold: to examine the historical transformations of the engine-of-growth industries in New York and distill the main determinants of the city's historical dominance as well as the challenges to its continued success; to study the nature and evolution of immigration flows into New York; and to analyze recent trends in a range of socioeconomic outcomes, both for the general population and recent immigrants more specifically.Business enterprises - New York (N.Y.) ; Economic conditions - New York (N.Y.) ; Federal Reserve District, 2nd ; Urban economics

Gentrification and Neighborhood Housing Cycles: Will America's Future Downtowns be Rich?

This paper identifies a new factor, the age of the housing stock, that affects where high- and low-income neighborhoods are located in U.S. cities. High-income households, driven by a high demand for housing services, will tend to locate in areas of the city where the housing stock is relatively young. Because cities develop and redevelop from the center outward over time, the location of these neighborhoods varies over the city’s history. The model predicts a suburban location for the rich in an initial period, when young dwellings are found only in the suburbs, while predicting eventual gentrification once central redevelopment creates a young downtown housing stock. Empirical work indicates that if the influence of spatial variation in dwelling ages were eliminated, longstanding central city/suburban disparities in neighborhood economic status would be reduced by up to 50 percent. Model estimates further predict that between 2000 and 2020, central-city/suburban differences in economic status will widen somewhat in smaller cities but narrow sharply in the largest American cities as they become more gentrified.spatial expansion of cities, housing cycles, urban expansion

Borrowing constraints, household debt, and racial discrimination in loan markets

Housing - Finance ; Discrimination in mortgage loans

Secondary Markets, Risk, and Access to Credit Evidence from the Mortgage Market

Secondary markets for credit are widely believed to improve efficiency and increase access to credit. In part, this is because of their greater ability to manage risk. However, the degree to which secondary markets expand access to credit is virtually unknown. Using the mortgage market as an example, we begin to fill that gap. Our conceptual model suggests that secondary credit markets have potentially ambiguous effects on interest rates, but unambiguous positive effects on the number of loans issued. We focus our empirical analysis on the latter using 1992-2004 HMDA files for conventional, conforming, home purchase loans in conjunction with Census tract data

Homeownership Boom and Bust 2000 to 2009: Where Will the Homeownership Rate Go from Here?

The increase in the homeownership rate in the middle of the last decade extended to all age groups but was most pronounced among individuals under age 30. These increases coincided with looser credit conditions that enhanced household access to mortgage credit along with evidence of less risk averse attitudes towards investment in homeownership. Following the crash, these trends have reversed and homeownership rates have largely reverted back to the levels of 2000. The drop in the homeownership rate from an all-time high of 69.2 in 2004 to 66.4 percent in the first quarter of 2011 reflects a decline from unsustainable levels to something closer to historical averages, and while the homeownership rate may have bottomed out, it could fall another one or two percentage points due to tightened credit and other factors

Do the GSEs Expand the Supply of Mortgage Credit? New Evidence of Crowd Out in the Secondary Mortgage Market

The dramatic government takeover of Fannie Mae and Freddie Mac in September, 2008 was motivated in part by a desire to ensure a continued flow of credit to the mortgage market. This study examines a closely related issue: the extent to which GSE activity crowds out mortgage purchases by private secondary market intermediaries. Evidence of substantial crowd out suggests that government support for the GSEs may be less warranted, whereas the absence of crowd out implies that GSE loan purchases enhance liquidity.Using 1994-2008 HMDA data for conventional, conforming sized loans, three distinct periods with regard to GSE crowd out are apparent. From 1994-2003, the share of loans sold to the secondary market increased from 60 to over 90 percent, private sector and GSE market shares of loan purchases were roughly similar for most market segments, and IV estimates indicate relatively little GSE crowd out of private secondary market purchases. From 2004 to 2006, private loan purchases boomed and dominated those of the GSEs, while IV estimates indicate crowd out jumped to 50 percent at the peak of the boom. This is especially true in the market for home purchase as opposed to refinance loans. With the crash in housing and mortgage markets in 2007, private sector intermediaries pulled back, the GSEs regained market share, and evidence of GSE crowd out disappeared in both the home purchase loan and refinance markets. These patterns suggest that the degree of GSE crowd out varies with market conditions and that the federal takeover of Fannie Mae and Freddie Mac likely served to enhance liquidity to the mortgage market during the 2007-2009 financial crisis

Agglomeration, Labor Supply, and the Urban Rat Race

This paper establishes the existence of a previously overlooked relationship between agglomeration and hours worked. Among non-professionals, hours worked decrease with the density of workers in the same occupation. Among professionals, a positive relationship is found. This relationship is twice as strong for the young as for the middle-aged. Moreover, young professional hours worked are shown to be especially sensitive to the presence of rivals. We show that these patterns are consistent with the selection of hard workers into cities and the high productivity of agglomerated labor. The behavior of young professionals is also consistent with the presence of keen rivalry in larger markets, a kind of urban rat race. This evidence of a rat race is nearly unique in the literature