Abstract
AbstractU.S. house prices fell nearly 30% between 2006 and 2012. Meanwhile, homeownership rates declined as mortgage credit supply tightened and investors bought up properties. Although nationally house prices recovered to prebust levels by 2016, homeownership rates declined through mid‐2016, as investors, particularly those purchasing through corporations, gained market share. By exploiting heterogeneity in zip codes' exposure to Fannie Mae and Freddie Mac programs that affected investors' access to foreclosed properties, we find that increased presence of investors explains a significant fraction of the house price recovery. Investors reduced vacancies and shortened the time foreclosed properties spent in bank ownership.
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