Open Access. Powered by Scholars. Published by Universities.®

Real Estate Commons

Open Access. Powered by Scholars. Published by Universities.®

Articles 1 - 6 of 6

Full-Text Articles in Real Estate

Borrowing Constraints And Homeownership, Arthur Acolin, Jesse Bricker, Paul Calem, Susan Wachter May 2016

Borrowing Constraints And Homeownership, Arthur Acolin, Jesse Bricker, Paul Calem, Susan Wachter

Finance Papers

This paper identifies the impact of borrowing constraints on homeownership in the U.S. in the aftermath of the 2008 financial crisis. While homeownership declines and tightened credit are evident, the role the tightening of credit has had on the probability of individual households to become homeowners has not been previously identified. The homeownership rate in 2010-2013 is estimated to be 2.3 percentage points lower than if the constraints were set at the 2001 level.


The Housing And Credit Bubbles In The United States And Europe: A Comparison, Susan Wachter Mar 2015

The Housing And Credit Bubbles In The United States And Europe: A Comparison, Susan Wachter

Finance Papers

A house price boom occurred simultaneously in the United States and in a number of European countries from 2003 to 2007, accompanied in each case by an expansion in housing finance. This article considers the role of financial innovation along with incomplete markets in these cycles.


Reit Financing Choices: Preparation Matters, Andrey Pavlov, Eva Steiner, Susan M. Wachter Mar 2015

Reit Financing Choices: Preparation Matters, Andrey Pavlov, Eva Steiner, Susan M. Wachter

Finance Papers

Sun, Titman, and Twite (2014) find that risky capital structure characteristics, such as high leverage, a high share of debt due in the near future and a high share of variable-rate debt, significantly reduce the cumulative total returns of US REITs over the 2007-2009 financial crisis. In this paper we show that preparing ahead of the crisis significantly improved the cumulative return over the crisis period even after controlling for the levels of the relevant capital structure characteristics at the start of the crisis. Specifically, we document that REITs which reduced leverage and increased maturity prior to the crisis fared ...


Real Estate Collateral Value And Investment: The Case Of China, Jing Wu, Joseph Gyourko, Yongheng Deng Mar 2015

Real Estate Collateral Value And Investment: The Case Of China, Jing Wu, Joseph Gyourko, Yongheng Deng

Finance Papers

Previous research on the United States and Japan finds economically large impacts of changing real estate collateral value on firm investment that amplified the business cycles of those countries. Working with unique data on land values in 35 major Chinese markets and a panel of firms outside the real estate industry, we estimate investment equations that yield no evidence of a collateral channel effect. Further analysis indicates that China’s debt is not characterized by the frictions that give rise to collateral channel effects elsewhere. Essentially, financially constrained borrowers appear able credibly to commit to repay debt in China. While ...


Borrowing Constraints During The Housing Bubble, Irina Barakova, Paul S. Calem, Susan M. Wachter Jun 2014

Borrowing Constraints During The Housing Bubble, Irina Barakova, Paul S. Calem, Susan M. Wachter

Finance Papers

The impact of borrowing constraints on homeownership has been well established in the literature. Wealth is most likely to restrict homeownership followed by credit and income. Using recent movers from the 1979 National Longitudinal Survey of Youth and borrowing constraint definitions commonly used in the literature, we examine the impact of these constraints on the probability of homeownership during the housing market boom between 2003 and 2007. We show that whereas the pool of financially constrained households expanded, the marginal impact of borrowing constraints associated with income and credit quality declined during this period. The constraint associated with wealth, however ...


The Inevitability Of Market-Wide Underpriced Risk, Andrey Pavlov, Susan Wachter Jan 2006

The Inevitability Of Market-Wide Underpriced Risk, Andrey Pavlov, Susan Wachter

Finance Papers

Lenders are frequently accused of mispricing the put option embedded in nonrecourse lending. Prior research shows one lender's incentives to underprice. Here, we identify the conditions for a marketwide underpricing equilibrium. We demonstrate that, in a market with many players, given sufficient time, a race to the bottom and marketwide mispricing are inevitable. Underpricing occurs because bank managers and shareholders exploit mispriced deposit insurance. We show that the probability of the underpricing equilibrium increases with time since the previous market crash and that the more volatile the underlying asset market, the more likely it is subject to underpricing.