From boom to bust: Did the financial fragility of homeowners increase in an era of greater financial deregulation?

Journal of Economic Issues

Volumn 42, Issue 3, 2008, Pages 607-632

  Weller, Christian E ^a   Sabatini, Kate ^b  

^a UNIVERSITY OF MASSACHUSETTS BOSTON   (United States)

^b BOSTON COLLEGE   (United States)

Author keywords

Home equity; Leverage; Mortgages; Portfolio allocation; Variable interest debt

Indexed keywords

EID: 57249111651     PISSN: 00213624     EISSN: None     Source Type: Journal    
DOI: 10.1080/00213624.2008.11507170     Document Type: Article

References (70)

1. Apgar, William, and Zhu Xiao Di. "Housing Wealth and Retirement Savings: Enhancing Financial Security for Older Americans." Joint Center for Housing Studies Working Paper 05-8. Cambridge, MA: Harvard University, 2005.
2. Arestis, Philip and Panicos Demetriades. "Financial Liberalization: The Experience of Developing Countries." Eastern Economic Journal 25, 4 (Fall 1999): 441-457.
3. Baker, Dean. "The Run-Up in Home Prices: Is it Real or Is it Another Bubble." CEPR Policy Brief. Washington, D.C.: Center for Economic and Policy Research, 2002.
4. -. "The Menace of an Unchecked Housing Bubble." The Economist's Voice 3, 4 (2006): Article 1.
5. Belsky, Eric S., and Mark Duda. "Asset Appreciation, Timing of Purchases and Sales, and Returns to Low-Income Homeownership." In Low-Income Homeownership: Examining the Unexamined Goal, edited by Nicolas P. Retsinas and Eric S. Belsky, pp. 208-218. Washington, D.C.: Brookings Institution Press, 2002.
6. Board of Governors, Federal Reserve System. Survey of Consumer Finances. Washington, D.C., 2006a.
7. -. Release H.15 Selected Interest Rates. Washington, D.C., 2006b.
8. -. Flow of Funds Accounts of the United States. Washington, D.C., 2007a.
9. -. Debt Service Ratios and Financial Obligation Ratio. Washington, D.C., 2007b.
10. Bradford, Calvin. "Financing Homeownership: The Federal Role in Neighborhood Decline." Urban Affairs Quarterly 14, 3 (1979): 313-335.
11. Bureau of Labor Statistics. Consumer Price Index. Washington, D.C., 2007.
12. Cairney, John, and Michael M. Boyle. "Homeownership, Mortgages, and Psychological Distress." Housing Studies 19, 2 (2004): 161-74.
13. Campbell, John Y., and Joao F. Cocco. Household Risk Management and Optimal Mortgage Choice. NBER Working Paper No. 9759. Cambridge, MA: National Bureau of Economic Research, 2003.
14. Center for Responsible Lending. The Subprime Mortgage Crisis: Context, Causes, Solutions. Presentation to the Federal Reserve Bank of San Francisco, presentation for the Preserving Homeownership -Preserving Communities Roundtables. http://www.ftbsf.org/community/issues/assets/preservation/ resources/crl- presentation.pdf 2007.
15. Chaterjee, Satyajit. Taxes, Homeownership, and the Allocation of Residential Real Estate. Federal Reserve Bank of Philadelphia Business Review. September/October 2003: 3-10.
16. Chen, Celia. "More Bubble Talk." Economy.com October 24, 2004.
17. nd Quarter 2002: 7-16
18. Coulson, Ed, and Lynn M. Fisher. "Tenure Choice and Labour Market Outcomes." Housing Studies 17, 1 (2002): 35-49.
19. Crone, Theodore. Capitalization of the Quality of Local Public Schools: What Do Home Buyers Value? Federal Reserve Bank of Philadelphia Working Paper No. 06-15. Philadelphia, PA, 2006.
20. De Roon, Frans A., Piet M.A. Eicholtz, and Kees C.G. Koedijk. The Portfolio Implications of Homeownership. CEPR Discussion Paper No. 3501. London, UK: Center for Economic and Policy Research, 2002.
21. Demetriades, Panicos. "Financial Liberalization and Credit-Asset Booms and Busts in East Asia." Paper prepared for the conference The Credit Crunch in East Asia: What Do We Know? What Do We Need To Know? Washington, DC: World Bank, November 30-December 1, 1999.
22. Demirgüç-Kunt, Asli and Enrica Detragiache. Financial Liberalization and Financial Fragility. World Bank Policy Research Working Paper No. 1917. Washington, DC: World Bank, 1999.
23. Dietz, Robert D., and Don R. Haurin. "The Social and Private Micro-level Consequences of Homeownership." Journal of Urban Economics 54, 4 (2003): 410-450.
24. DiPasquale, Denise, and Edward L. Glaeser. "Incentives and Social Capital: Are Homeowners Better Citizens?" Journal of Urban Economics 45 (1999): 354-84.
25. Dodd, Randall. Hedge Funds Again: A Response to Deregulation. Financial Policy Forum Special Policy Brief No. 30. Washington, DC: Financial Policy Forum, 2006.
26. Dunsky, Robert and James Follain. "Tax-induced Portfolio Reshuffling: The Case of the Mortgage Interest Deduction." Real Estate Economics 28, 4 (2000): 683-718.
27. Galster, George C. "Empirical Evidence on Cross-Tenure Differences in House Maintenance and Conditions." Land Economics 59 (1983): 107-13.
28. Goetzman, William N. and Matthew Spiegel. "Policy Implications of Portfolio Choice in Underserved Mortgage Markets." In Low-income Homeownership: Examining the Unexamined Goal, edited by Nicolas P. Retsinas and Eric S. Belsky, pp. 257-274- Washington, DC: The Brookings Institution, 2002.
29. Goodhart, Charles, Boris Hofmann, and Masurto Segoviano. "Bank Regulation and Macroeconomic Fluctuations." Seoul Journal of Economics 19, 1 (2006): 3-41.
30. Grabel, Ilene. "Assessing the Impact of Financial Liberalisation on Stock Market Volatility in Selected Developing Economies." Journal of Development Studies 31, 6 (1995): 903-917.
31. Grabel, llene. "Rejecting Exceptionalism: Reinterpreting the Asian Financial Crises." In Michie, Jonathan and John Grieve Smith (eds.), Global instability and World Economic Governance, edited by Jonathon Michie. Oxford: Routledge, 1998.
32. Green, Richard K., and Michelle J. White. "Measuring the Benefits of Home Owning: The Effects on Children." Journal of Urban Economics (1997): 441-61.
33. Gruber, Jonathan W., and Steven B. Kamin. Explaining the Global Pattern of Current Account Imbalances. International Finance Discussion Papers No. 846. Washington, DC: Board of Governors, Federal Reserve System, 2005.
34. Harding, John, Thomas J. Miceli, and C.F. Sirmans. "Do Owners Take Better Care of Their Housing Than Renters?" Real Estate Economics 28 (2000): 663-81.
35. Haurin, Don, Toby Parcel, and Ruth Haurin. "Does Homeownership Affect Child Outcomes?" Real Estate Economics 30 (2002): 635-666.
36. Hu, Xiaoquing. "Households' Savings and Portfolios." Investment Management and Financial innovations 3 (2004): 132-44.
37. Jackson, Kenneth T. "Ctabgrass Frontier: The Suburbanization of the United States." New York: Oxford University Press, 1985.
38. Jud, G. Donald, and Daniel T. Winkler. "Returns to Single-Family Owner-Occupied Housing." Journal of Real Estate Practice and Education 8, 1 (2005): 25-44.
39. Kaminsky, Graciela, and Carmen Reinhart. "The Twin Crises: The Causes of Banking and Balance-of-Payment Problems." American Economic Review 89, 3 (1999): 473-500.
40. Kornfeld, Warren. Testimony before the Hearing on the "Role of Securitization in Subprime Mortgage Market Turmoil" by the Subcommittee on Securities, Insurance, and Investment, United States Senate, April 17, 2007.
41. Krumm, Ronald, and Austin Kelly. "Effects of Homeownership on Household Savings." Journal of Urban Economics 26, 3 (1989): 281-94.
42. Lehnert, Andreas. Housing, Consumption and Credit Constraints. FEDS Working Paper 2004-63. Washington, D.C., 2004.
43. Meyer, Peter B., Jerry Yeager, Michael A. Burayidi. "Institutional Myopia and Policy Distortions: The Promotion of Homeownership for the Poor." Journal of Economic Issues 28, 2 (1994): 567-576.
44. Mishel, Lawrence, Jared Bernstein, and Sylvia Allegretto. The State of Working America 2006/07. Ithaca, NY: Cornell University Press, 2007.
45. Munch, Jakob R., Michael Rosholm,and Michael Svarer. "Are Homeowners Really More Unemployed?" Economic Journal 116, 514 (2006): 991-1013.
46. Office of Federal Housing Enterprise Oversight. House Price Index. Washington, D.C., 2006.
47. Oswald, Andrew. "Thoughts on the NAIRU." Journal of Economic Perspectives 11, 1 (1997): 227-228.
48. Owen, Lamont and Jeremy C. Stein. "Leverage and House-Price Dynamics in U.S. Cities, RAND." Journal of Economics 30, 3 (1999): 498-514.
49. Posey, Lisa L., and Abdulla Yavas. "Adjustable and Fixed Rate Mortgages as a Screening Mechanism for Default Risk." Journal of Urban Economics 49, 1 (2001): 54-79.
50. Pressman, Steven. "The Decline of the Middle Class: An International Perspective." Journal of Economic Issues 41, 1 (2007): 181-199.
51. Rohe, William M., Shannon Van Zandt and George McCarthy. "Homeownership and Access to Opportunity." Housing Studies 17, 1 (2002): 51-61.
52. Shilling, James , C.F. Sirmans, and Jonathan F. Dombrow. "Measuring Depreciation in Single-Family Rental and Owner-Occupied Housing." Journal of Housing Economics 1 (1991): 368-83.
53. Shlay, Anne B. "Low-Income Homeownership: American Dream or Delusion?" Urban Studies 43, 3 (2006): 511-531.
54. Squires, Gregory D. Capital and Communities in Black and White: The Intersections of Race, Class and Uneven Development. Albany, NY: State University of New York Press, 1994.
55. Spong, Kenneth. Banking Regulation: Its Purposes, Implementation, and Effects. Federal Reserve Bank of Kansas City, 2000.
56. Stango, Victor O. "The Tax Reform Act of 1986 and the Composition of Consumer Debt." National Tax Journal 52 (1999): 717-39.
57. U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States 2004. Washington, D.C., 2005.
58. -. American Housing Survey. Washington, D.C.,2006a.
59. -. Housing Vacancies and Homeownership (CPS/HVS). Washington, D.C., 2006b.
60. -. Income, Poverty, and Health Insurance Coverage in the United States 2006. Washington, D.C., 2007.
61. Vandell, Kerry D. "Securitization of the US Mortgage Market: Progress and Pitfalls, with Lessons for Japan." Paper presented at the International Land Policy Review Conference (2000).
62. VanderHoff, James H. "Adjustable and Fixed Rate Mortgage Termination, Option Values and Local Market Conditions: An Empirical Analysis." Real Estate Economics 24, 3 (1996): 379-406.
63. Van Order, Robert. "The Structure and Evolution of American Secondary Mortgage Markets, with some Implications for Developing Markets." Housing Finance International 26, 1 (2001): 16-31.
64. Weller, Christian E. "Need or Want? What Explains the Run-up in Consumer Debt." Journal of Economic issues 41, 2 (2007): 583-592.
65. Weller, Christian E. and Bernard Morzuch. "International Financial Contagion: Why are Eastern Europe's Banks not Failing, when Everybody Else's Are?" Economics of Transition 8, 3 (2000): 639-663.
66. Weller, Christian E. and Kate Sabatini. "Have Differences in Credit Access Diminished in an Era of Financial Market Deregulation?" PERI Working Paper No. 144. Amherst, MA, University of Massachusetts: Political Economy Research Institute, 2007.
67. Weller, Christian E. "Financial Crises after Financial Liberalisation: Exceptional Circumstances or Structural Weakness?" Journal of Development Studies 38, 1 (2001): 98-127.
68. Wright, Gwendolyn. Building the American Dream: A Social History of Housing in America. Cambridge, MA: MIT Press, 1983.
69. Zandi, Mark. "House Price Redux." Economy.com October 01, 2002.
70. Zimmerman, Thomas. The U.S. Subprime lndustry in Turmoil. Washington, DC: Mortgage Bankers Association, 2007.