Housing Equity Research Articles

Leading Gains and Funding Risk in Baltic Housing Markets

This paper analyzes lending gains and funding risk in the Baltic housing markets. Transition economies are exposed to both cycles and structural shifts, relating housing market fundamentals to a more diversified set of processes than in mature economies. Still, as housing is a nontradable good, transition allows for high rates of appreciation. When house price growth exceeds the mortgage rate, there are lending gains from mortgage-financed housing. As higher leverage increases funding risk, a challenge emerges for transition economies, which are in a monetary union with mature economies. Asymmetric shocks to housing markets may threaten financial stability as the monetary policy does not respond to country-specific house price bubbles. In addition to a discussion on asymmetric shocks and the role of housing, the paper offers an illustration of the lending gain and the funding risk that housing markets in transition economies may entail. The paper simulates the return to housing equity across the Baltic states over the period 2010-2020. While a strong housing market has provided Estonian households with the highest price gains, both Latvian and Lithuanian households have taken advantage of the deepening monetary integration towards the end of the period. Still, the more volatile housing markets in the two southernmost Baltic states make leverage set its mark on the risk-return profile.

Child Poverty and Health in the United States: Introduction and Executive Summary.

Child Poverty and Health in the United States: Introduction and Executive Summary.

Actions needed to promote health equity and the mental health of Canada’s Black refugees

ABSTRACT Objectives The overall goal was to synthesize knowledge on actions that need to be taken to promote health equity and the mental health of Black refugees in Canada. Design Group concept mapping systems were applied to generate and organize action-oriented statements related to the different social determinants of health. A total of 174 participants from the cities of Calgary and Edmonton with experience working with Black Canadians participated in four focus groups: (a) 2 focus groups that engaged 123 participants in brainstorming 84 statements guided by the following focus prompt: ‘A specific action that would improve the mental health equity of Black refugees living in Canada is … ’ and (b) 2 focus groups of 51 participants who sorted the generated statements and rated them by order of ‘importance’ and ‘ideas seen in action.’ Data was further computed and analysed by the research team and a select advisory group from the participants. Results A 10-cluster map generated included the following clusters: (1) promoting cultural identity, (2) promoting ways of knowing, (3) addressing discrimination and racism, (4) addressing the criminalization of Black Canadians, (5) investing in employment for equity, (6) promoting equity in housing, (7) facilitating self-determination, (8) improving (public) services, (9) promoting appropriate and culturally relevant mental health services, and (10) working with and addressing faith and belief related issues. Clusters 4 and 9 ranked as the most important clusters in promoting health equity and the mental health of Black Canadians. Conclusions Addressing the criminalization of Black Canadians through a range of rehumanizing interventions at institutional levels will provide a platform from which they can participate and engage others in developing appropriate and culturally relevant mental health services.

Asset-rich and cash-poor: which older adults value reverse mortgages?

AbstractHome equity represents a substantial share of retirement wealth for many older persons, particularly in Asia where national housing policies have encouraged home-ownership. This paper explored the potential for reverse mortgages to help ‘asset-rich and cash-poor’ older Singaporeans unlock their home equity while ageing in place. The empirical analysis was based on a nationally representative survey of home-owners age 50+ in the 2018 Singapore Life Panel (N = 6,258). Our analyses showed that the average older home-owner holds some 60 per cent of total net wealth in housing equity, suggestive of high demand potential for reverse mortgage products. Nevertheless, actual interest in such products was much below potential demand. Only one in four older home-owners indicated interest in commercial reverse mortgages if these were to become available; a larger majority had never heard of the financial product. Interest in reverse mortgages was positively associated with product awareness and self-rated product understanding. This implies that a critical step towards building consumer interest would be to enhance awareness of such products and simplify related contract terms. Having a mortgage, fewer children, financial literacy and preparedness for retirement were also positively associated with interest level. These results have implications for targeted interventions to enhance consumer awareness and spur interest in reverse mortgages, especially in ageing societies where older people have built up substantial equity through the housing market over time.

The Wealth Inequality of Nations

Comparative research on income inequality has produced several frameworks to study the institutional determinants of income stratification. In contrast, no such framework and much less empirical evidence exist to explain cross-national differences in wealth inequality. This situation is particularly lamentable as cross-national patterns of inequality in wealth diverge sharply from those in income. We seek to pave the way for new explanations of cross-national differences in wealth inequality by tracing them to the influence of different wealth components. Drawing on the literatures on financialization and housing, we argue that housing equity should be the central building block of the comparative analysis of wealth inequality. Using harmonized data on 15 countries included in the Luxembourg Wealth Study (LWS), we demonstrate a lack of association between national levels of income and wealth inequality and concentration. Using decomposition approaches, we then estimate the degree to which national levels of wealth inequality and concentration relate to cross-national differences in wealth portfolios and the distribution of specific asset components. Considering the role of housing equity, financial assets, non-housing real assets, and non-housing debt, we show that cross-national variation in wealth inequality and concentration is centrally determined by the distribution of housing equity.

Attitudes towards housing equity release strategies among older home owners: A European comparison

The ageing of European societies, the mounting pressure on pension systems, the rise of home ownership and the growth in house prices have sparked interest in housing equity release options and strategies. Much of the available literature approaches this topic through a financial lens, focusing on equity release schemes as a way to free up housing equity while remaining in the dwelling. However, there are also other ways in which housing wealth can be extracted, such as downsizing, moving to a rental dwelling or subletting part of the dwelling. There is very little recent international comparative insight into the perceptions and preferences of older home owners with regard to this matter. Which housing equity release strategy do they prefer and why? And to what extent is their decision to release housing equity influenced by the bequest motive? Based on focus group research in six European countries (Germany, the United Kingdom, Ireland, Hungary, Italy and the Netherlands), this paper observes some general trends and identifies a number of country specific variations.

Amazon commits $2.1 billion to affordable housing programs

Online retail giant Amazon has announced a new $2.1 billion Housing Equity Fund that will work to preserve and create over 20,000 affordable housing units in Washington State's Puget Sound region, Arlington, Va., and Nashville, Tenn., the company's three “headquarters” communities. According to the company, the fund will help preserve existing housing and help create inclusive housing developments through below‐market loans and grants to housing partners, traditional and non‐traditional public agencies and minority‐led organizations.

Housing Wealth as Precautionary Saving: Evidence from Urban China

AbstractThis article provides new evidence on the housing-wealth effect on consumption using household panel data. A key advantage in studying the Chinese housing market is the absence of the collateral channel because households are prohibited from withdrawing housing equity. The results show that for every 1% increase in housing wealth, household consumption increases by 0.14%, suggesting an implied marginal propensity to consume out of housing wealth of 0.023. Further, we find that this marginal propensity to consume is the largest among employees who face greater income uncertainty, suggesting that precautionary-saving motives are driving the results.

Evaluating the Benefits of a Streamlined Refinance Program

ABSTRACT Mortgage borrowers who have experienced employment disruptions as a result of the COVID-19 pandemic are unable to refinance their loans to take advantage of historically low market rates. In this article, we analyze the effects of a streamlined refinance program for government-insured loans that would allow borrowers to refinance without needing to document employment or income. In addition, we consider a cash-out component that would allow borrowers to extract some of the substantial housing equity that many have accumulated in recent years.

,,,Sexual Orientation and Gender Identity Discrimination Claims Under the Fair Housing Act After Bostock v. Clayton County

The Supreme Court recently ruled in Bostock v. Clayton County, Georgia that Title VII of the Civil Rights Act of 1964 protects gay, lesbian and transgender employees from discrimination. The majority held that the statute’s prohibition against discrimination in employment “because of . . . sex” necessarily applies to discrimination based on sexual orientation and gender identity. This Article argues that the federal Fair Housing Act (FHA), which has identical language prohibiting housing discrimination “because of . . . sex,” should also now be interpreted to prohibit discrimination based on sexual orientation and gender identity. This is an obvious next step given the similar language, structure, and purpose of both statutes, and the courts’ long tendency to use Title VII cases to guide their interpretation of the FHA. This would also be a welcome development for housing equity, considering the significant discrimination that LGBTQ individuals experience in housing and the dearth of legal protections in place for them. This Article examines the development of Title VII law with respect to claims by LGBTQ individuals, and the parallel evolution of FHA case law. In particular, it examines how the reasoning behind Title VII cases applies to the FHA. While it is not always true that Title VII analysis developed in the workplace context can translate seamlessly to the housing context, in this case, it does. There is one area which presents a potential hurdle: the problem of mixed motives and causation. The two statutes differ in their treatment of discrimination claims where the defendant was motivated by both permissible and prohibited purposes. If Bostock’s reasoning relies on mixed motives theory, this difference might create difficulty for courts who wish to apply its conclusions to the FHA. This is not the case, however. Although much of the Bostock opinion is taken up with examining the causal role that sex plays in sexual orientation and gender identity discrimination, the Court’s analysis does not implicate mixed motives. Rather, Bostock holds that sex discrimination is inextricably linked to discrimination based on sexual orientation and gender identity. Thus, the mixed motive issue never arises, and the differences between the two statutes on this point are irrelevant.

Homeownership Among Older Adults: Source of Stability or Stress?

For older adults, homeownership can be an important source of housing stability and personal wealth that can be tapped in later life, including for long-term care. Nonetheless, owning a home is not without physical and financial challenges for aging households, and many owners are reluctant to take advantage of housing equity later in life. This paper reviews the conditions of older homeowners to assess the degree to which owning a home is—or is not—associated with financial security and housing stability. We review trends in homeowning among older adults, including differences by race/ethnicity and income. We then describe the extent of housing affordability challenges among homeowners, the degree of mortgage indebtedness, and the extent and use of housing equity. Finally, we examine issues related to housing quality and accessibility. The paper concludes with a discussion of policy implications.

Housing equity and household consumption in retirement: evidence from the Singapore Life Panel©

ABSTRACT Housing affordability for elderly homeowners involves an entirely different set of issues as compared to housing affordability for first-time homeowners. To afford to ‘age-in-place’ may require homeowners to access channels that enable them to withdraw their housing equity to finance consumption in retirement. We utilize data from the Singapore Life Panel© survey to empirically investigate the impact of housing equity on the consumption of elderly households. Based on panel analysis, we find housing equity value has no significant impact on non-durable consumption for elderly people. The conclusion holds for a battery of robustness checks. Moreover, heterogeneity analyses based on subsamples by the health condition, the age of household head, the house type, and the number of properties owned also show no significant impact of housing equity on consumption. Finally, we use scenario analysis to study the Lease Buyback Scheme (LBS), a novel housing equity monetization scheme that allows elderly households to unlock housing equity for retirement financing. An individual scenario analysis reveals positive but negligible effects, which may explain the low take-up rate for the LBS.

A spatial analysis of borrowers’ mortgage termination decision – A nonparametric approach

This paper examines borrower’s mortgage loan termination behaviors (default and prepayment) by applying a nonparametric spatial model to a traditional loan hazard model. In this spatial hazard model, all of the parameters are allowed, but not forced, to vary across space. This means that borrowers in different locations are allowed to act differently with respect to changes in the termination incentives (e.g., changes in interest rates). Using a sample of 30-year fixed-rate subprime mortgage loans for home purchase, this study finds spatial variation in a borrower’s responsiveness to interest rate change and housing equity change in their decision to terminate a loan. The results further show that the nonparametric model offers improvements in the estimation of the loan termination probabilities.

Housing wealth and aged care: asset-based welfare in practice in three OECD countries

The transition of the baby boomer bulge into old age and their increasing longevity will lift the numbers of elderly in residential aged care. Population ageing and associated fiscal pressures have motivated governments to shift responsibility for the financing of aged care to the individual. We consider policies that include owner-occupiers’ housing wealth and imputed rental incomes in means tests that determine co-contribution charges for residential aged care. Differences in how housing wealth is included in the residential aged care resource tests of three OECD countries – Australia, England and the Netherlands – are documented. We find some neglected equity implications as tenants in all three countries typically pay higher co-payments for their residential aged care than homeowners with similar wealth holdings. These outcomes are a consequence of the concessional treatment of owners’ housing equity stakes, and of wider significance given the growing importance of asset-based welfare strategies. England has relatively progressive asset and income tests that offer more limited concessions.

Housing (In)Equity and the Spatial Dynamics of Homeownership in France: A Research Agenda

AbstractThis paper advances a research agenda on how asset‐based welfare policies, residential market volatility, stratified accumulation and vulnerability impinge upon the geography of inequality in property markets. Since the mid‐1990s, housing prices have increased faster than the income of buyers, becoming a driver of social polarisation and household vulnerability. Few studies have however explicitly linked socio‐spatial inequality to asset capitalisation, instability and vulnerability in residential housing markets. We employ an empirically‐grounded investigation of the factors driving and reinforcing these dynamics, what we conceptualise as a feedback loop mediating particular housing finance regimes. Drawing on three French cities (Paris, Lyon, and Avignon) our study develops a comparative framework to interpret the relational effects of price, equity and homeowner vulnerability on the production of inequality across different geographical scales. Our approach puts into conversation debates concerning housing markets, social inequality, and ordinary financialisation in the period since the Global Financial Crisis.

Housing equity withdrawal for development of assisted-living facilities

PurposeThe purpose of this study is to develop new type of reverse mortgage contract. How to provide adequate services and housing for an increasing number of people that are dependent on the help of others is a crucial question in the European Union (EU). The housing stock in Europe is not fit to support a shift from institutional care to the home-based independent living. Some 90% of houses in the UK and 70%–80% in Germany are not adequately built, as they contain accessibility barriers for people with emerging functional impairments. The available reverse mortgage contracts do not allow for relocation to their own adapted facilities. How to finance the adaptation from housing equity is discussed.Design/methodology/approachThe authors have extended the existing loan reverse mortgage model. Actuarial methods based on the equivalence of the actuarial present values and the multiple decrement approach are used to evaluate premiums for flexible longevity and lifetime long-term care (LTC) insurance for financing adequate facilities.FindingsThe adequate, age-friendly housing provision that is appropriate to support the independence and autonomy of seniors with declining functional capacities can lower the cost of health care and improve the well-being of older adults. For financing the development of this kind of facilities for seniors, the authors developed the reverse mortgage scheme with embedded longevity and LTC insurance as a possible financial instrument for better LTC services and housing with care in assisted-living facilities. This kind of facilities should be available for the rapid growth of older cohorts.Research limitations/implicationsThe numerical example is based on rather crude numbers, because of lack of data, as the developed reverse mortgage product with LTC insurance is a novelty. Intensity of care and probabilities of care in certain category of care will change after the introduction of this product.Practical implicationsThe model results indicate that it is possible to successfully tie an insurance product to the insured and not to the object.Social implicationsThe introduction of this insurance option will allow many older adult with low pension benefits and a substantial home equity to safely opt for a reverse mortgage and benefit from better social care.Originality/valueWhile currently available reverse mortgage contracts lapse when the homeowner moves to assisted-living facilities in any EU Member State, in the paper a new method is developed where multiple adjustments of housing to the functional capacities with relocation is possible, under the same insurance and reverse mortgage contract. The case of Slovenia is presented as a numerical example. These insurance products, as a novelty, are portable, so the homeowner can move in own specialised housing unit in assisted-living facilities and keep the existing reverse mortgage contract with no additional costs, which is not possible in the current insurance products. With some small modifications, the method is useful for any EU Member State.

Employment and Earnings of African Americans Fifty Years After: Progress?

Employment and Earnings of African Americans Fifty Years After: Progress?

Spatial Heterogeneity in the Borrowers' Mortgage Termination Decision – a Nonparametric Approach

This paper attempts to address the issue of borrower heterogeneity when modelling a borrower’s mortgage loan termination behaviors (default and prepayment) by applying a nonparametric spatial model to a traditional competing-risks loan hazard model. In this spatial competing-risks hazard model, all of the parameters are allowed but not forced to vary across space. Using a sample of 30-year fixed-rate subprime mortgage loans for home purchase, this study finds a substantial level of spatial variation in a borrower’s responsiveness to interest rate change and housing equity change in exercising the default or prepayment option. Further analysis indicates that the observed spatial variation is associated with different levels of resistance to negative shocks, financial literacy, and financial constraints.

Health Equity Through Housing: A Blueprint for Systematic Legal Action

This is the sixth and final report in a series of reports exploring the role of law in housing equity and innovative uses of law to improve health equity through housing. The reports are based on extensive literature scans and semi-structured interviews with people who are taking action in housing policy and practice. The full series includes: Report I: A Vision of Health Equity in Housing; Report II: Legal Levers for Health Equity in Housing: A Systems Approach; Report III: Health Equity in Housing: Evidence and Evidence Gaps; Report IV: Creative People and Places Building Health Equity in Housing; Report V: Governing Health Equity in Housing; and Report VI: Health Equity through Housing: A Blueprint for Systematic Legal Action. This report offers guidance for action based on our research. We propose one overarching recommendation, the adoption of a systematic policy experimentation approach to achieving health equity in housing. We explore this approach through a case study of lead poisoning prevention efforts in Rochester, NY. We then present six areas of housing law that are ideal for experimentation. They range in topics, including strengthening fair housing enforcement to reduce discrimination, and supporting residential stability. The report also contains an appendix with additional ideas for experiments that emerged through our research and interviews.

Asset-Rich and Cash-Poor: Which Older Adults Value Reverse Mortgages?

Home equity represents a substantial share of retirement wealth for many older persons, particularly in Asia where national housing policies have encouraged homeownership. This paper explored the potential for reverse mortgages to help ‘asset-rich and cash-poor’ older Singaporeans unlock their home equity while ageing-in-place. The empirical analysis was based on a nationally representative survey of homeowners age 50+ in the 2018 Singapore Life Panel (N=6,258). Our analyses showed that the average older homeowner holds some 60% of total net wealth in housing equity, suggestive of high demand potential for reverse mortgage products. Nevertheless, actual interest in such products was much below potential demand. Only one in four older homeowners indicated interest in commercial reverse mortgages if these were to become available; a larger majority never heard of the financial product. Interest in reverse mortgages was positively associated with product awareness and self-rated product understanding. This implies that a critical step towards building consumer interest would be to enhance awareness of such products and simplify related contract terms. Having a mortgage, fewer children, financial literacy, and preparedness for retirement were also positively associated with interest level. These results have implications for targeted interventions to enhance consumer awareness and spur interest in reverse mortgages, especially in ageing societies where older people have built up substantial equity through the housing market over time.