Housing Market Crisis Research Articles

A greater crisis? Investigating MSA-level housing markets during the COVID-19 pandemic

This study analyzes the impact of uncertainties on ten major metropolitan statistical area (MSA)-level housing markets in the US from 2000 to 2022, elucidating the distinctive characteristics of crisis-like phenomena triggered by COVID-19. The study assesses crisis and noncrisis periods and finds that time-varying volatility in uncertainty is evident during crises, and economic policy uncertainty and macroeconomic uncertainty shocks show heightened volatility. The results suggest that the COVID-19 pandemic represents a more substantial crisis than the housing market crisis of 2007–2009. The findings indicate that uncertainty elevated MSA-level housing returns in 2000–2022 and offer supporting evidence for a flight-to-quality pattern as investors tended to allocate capital to safer real estate assets. The transmission mechanism from uncertainty to metropolitan housing markets is phase-dependent, with estimated responses to uncertainty shocks during crisis phases being more robust than those observed in normal times. This study provides valuable insights for monetary policymakers and offers guidance for investors’ risk management strategies.

Meeting housing demands, needs or desires? Conceptual considerations for designing housing policies

The central element of a housing market crisis is the unmet housing demand of the population, especially for the socio-economically disadvantaged. In the Austrian province of Tyrol, unmet housing demand has long been a social and political concern particularly in relation to housing affordability. Despite the ongoing construction and completion of housing units, many people find it difficult to find adequate housing. As part of a study to assess future housing in Tyrol, we took a closer look at the prevailing understanding of what is understood as housing demand and how this understanding can be distinguished from housing needs and housing aspirations. The article is based on the results of a goal-setting workshop with public policy stakeholders. By reflecting on the results, the paper sheds light on how unmet housing needs may represent not only a mismatch between supply and demand in the housing market, but also a mismatch between past, present and future aspirations and realities. The findings show that the question of what housing demand should be met by public policy, and whether this demand represents a need or an aspiration, is central to public housing policy and requires further consideration. The findings help to reflect on common theoretical and empirical conceptualisations of housing demand, need and aspiration, and how they can be assessed and identified in practice.

주택시장 안정을 위한 정책 방안의 중요도 분석

This study aims to present a direction for improvement by analyzing the relative importance of eacharea of housing policy in order to normalize and stabilize the housing market in the midst of a rapiddecline in the domestic housing market due to the global economic recession. First, areas requiringimprovement were derived due to excessive regulation among housing policies. Next, the relativeimportance of the housing policy items that need improvement was analyzed to suggest the direction forhousing policy improvement. As a result of analyzing the relative importance, the real estate financialsystem, the real estate tax system, the speculative demand suppression system, and the homelessperson-centered subscription system were found to be important in the order. Loan interest rates,LTV/DSR, capital gains tax, multi-homeowner heavy duty system, comprehensive real estate tax, andresale restrictions were recognized as the top rankings in the order of comprehensive ranking.Therefore,in order to restore the functioning of the housing market and pursue stabilization, first, the base interestrate should be stabilized to normalize the loan interest rate, and the LTV and DSR should be relaxed sothat end users do not have any obstacles in purchasing their own homes. Second, comprehensive realestate tax and capital gains tax should be alleviated. Comprehensive real estate tax needs to beintegrated with property tax or taxed based on net assets, and for capital gains tax, it is essential tolower the tax rate and ease the heavy tax rate for multi-homed people. Third, in order to recover fromthe slump in the real estate industry due to the decrease in real estate transaction volume, measures toalleviate the subject and period of resale restrictions are needed. This study is meaningful in that itempirically analyzed the need for improvement and the relative importance of each area of excessiveregulatory policy to overcome the housing market crisis, and suggested the direction of policyimprovement to normalize the housing market.

Detecting criticality in complex univariate time-series: A case study of the U.S. housing market crisis and other markets

The indices of asset markets are a key measure of an asset’s value and how this varies over time. However, these indices are known to switch abruptly between qualitatively different behavioural epochs underscoring the complexity of collective decision-making in large, interacting populations of economic agents. A central question in the study of index dynamics is how to represent these transitions in a way that allows for both equilibrium and non-equilibrium behaviour in a dynamical systems framework. With this in mind, we sought to detect non-equilibrium transitions between stable equilibria in housing market data across thirteen OECD countries from 1975 through to 2019. We are able to precisely locate transitions using the quadrant scan method that has been used in earlier studies to detect critical points in other dynamical systems. We then use stochastic Catastrophe Theory to reconstruct the multi-modal distributions near the U.S. housing crisis point and show mode-switching behaviour of markets transitioning from one equilibrium to another. Our results are in contrast to other recent findings for the U.S. market that were unable to find a critical point near the 2007 crisis.

Solving the housing market crisis in England and Wales: from New Towns to garden communities

ABSTRACT This article examines the causes of the current housing crisis in England and Wales as it has emerged since the 1940s and the potential contribution of an alternative model of sustainable housing delivery in the form of garden communities. The analysis focuses on the shifts in housing needs, political ideology, spatial planning policy, the house-building industry, and the role of the land market on the supply, quality and affordability of housing since 1945. The article discusses how the construction of new settlements, such as the Garden Cities and New Towns programmes of the 20th century, has once again emerged as a potential means to meet contemporary housing needs.

금융시장지수의 한국주택시장 적용성에 관한 연구

The 2007 U.S. subprime mortgage crisis shows the housing market crisis could expand into the financial market. Thus, if there is an early indicator of the housing market crisis, the financial crisis can be predicted in advance. This study calculates a volatility index for housing prices and examines whether the volatility index can account for information in the housing market, such as housing prices and the rate of change. The calculated volatility index confirmed that an increase over a fall in domestic housing prices was the predominant factor, especially the continued upward pressure on housing prices since 2016. On the other hand, the housing market has shifted from an upward trend to a downward trend since the second half of 2018 with each volatile index rising. As such, the ability to explain the housing price volatility indicators calculated for changes in the housing market was identified and the volatility indicators produced by them could be used as evidence to predict the housing market.

Rail station access and housing market resilience: Case studies of Atlanta, Baltimore and Portland

The recent United States housing market crisis resulted in a significant decline in housing market values. Yet, the extent to which urban amenities such as rail stations moderated the market impacts has not been entirely recognised. This study undertakes a repeat sales analysis to understand the impact of station proximity on housing values before, during and after the market crisis. Specifically, a housing price resilience index assesses market changes from 2002 to 2013 for single-family and multifamily homes within a quarter of a mile, half a mile, one mile and greater distances from the nearest rail station. The analysis is replicated in three cities: Atlanta, Georgia; Baltimore, Maryland; and Portland, Oregon. Although the recession had significant negative impacts on properties in each city, our study finds that access played a critical role in helping transit-orientated submarkets retain their value throughout the recession and recover value at a faster rate than homes without convenient fixed transit access.

Continued Success or Caught in the Housing Bubble? Black Immigrants and the Housing Market Crash

The recent housing market crisis in the United States led to a drastic drop in homeownership and house values nationwide. While research documents the disproportionate impact of the housing market crisis on blacks, and the surprisingly small effect on immigrants, no research investigates how individuals who are both black and immigrants fared. I use 2005–2007 and 2009–2011 pooled American Community Survey data (N = 2,000,689 and 2,013,001, respectively) to determine whether black immigrants’ housing market outcomes mirrored that of U.S.-born blacks or other immigrants during the housing crisis. Using the maximum likelihood estimator regression with a Heckman correction to measure race and nativity differences in homeownership and house value, I find that there is a great deal of diversity in black immigrant housing market outcomes. Caribbean immigrants experienced significantly larger drops in homeownership than U.S.-born whites and blacks and Asian immigrants, but there is no significant difference between whites and African immigrants. Consistent with previous research, living in major settlement areas meditated black immigrants’ housing market disadvantage. Despite the benefits of living in a co-ethnic community, both African and Caribbean immigrants experienced significantly larger drops in house value than U.S.-born blacks and whites and Asian immigrants. These findings indicate that black immigrants’ housing options are more rather than less constrained than U.S.-born blacks after the housing market crash. Given that the bulk of black wealth is held in home equity, reduced house values may also have long-term consequences on black immigrants’ ability to make, maintain, and pass on wealth across generations.

Small town resilience: Housing market crisis and urban density in Italy

Since the 1990s, city development has been promoted through densification processes by both local authorities and private investors in Europe and USA. This trend began in a boom phase of the real-estate market, sustained by high market demand and high prices. The aim of the present study is to see how the market has responded to six years of economic recession in Italy and whether urban form has a relationship with housing market performance. Is urban density still preferable in terms of the economic sustainability of investments? Or has the demand side of the market changed its behaviour? To elucidate this issue, we perform a multivariate regression and a cluster analysis on housing price variations from 2008 to 2014 with a dataset of economic and urban structure variables concerning the 114 most important Italian cities. The results suggest that housing market in less dense cities is more resilient and affordable than in denser cities during a recession phase. This phenomenon should be taking into account by local public authorities addressing and promoting urban development.

Effects of entering adulthood during a recession

Current cohorts of young adults entered adulthood during an international labor and housing market crisis of a severity not experienced since the Great Depression. Concerns have arisen over the impacts on young adults’ employment, income, wealth, and living arrangements, and about whether these young adults constitute a “scarred generation” that will suffer permanent contractions in financial well-being. If true, knowing the mechanisms through which young adults’ finances have been affected has important implications for policy measures that could improve the financial well-being of today’s young adults in the present and future.

An Examination of the Influence of Household Financial Decision Making on the US Housing Market Crisis

This paper investigates the impact of what the extant literature has come to view as some of the major causes of the 2007 US housing market crisis. In particular we investigate the hypothesized effect of, lax financial regulations, the “savings glut” that is invested in the US from abroad, government support for increased home ownership, rising homeowners’ equity due to the real-estate boom, expansionary monetary policy, and bankruptcy reform. We examine how these hypothesized causes, working through household and institutional level decision-making, based on information availability and incentives, influenced the outcomes in the market for homes. Using a system dynamics model of household finance, we overlay the hypothesized causes chronologically to extrapolate their real-world simultaneous impact and test the hypothesis that they could have together led to the crisis, by simulating and checking against observed data. We find that with the exception of lax financial regulations, each cause by itself provides only a partial explanation of the crisis. Interestingly, the controversial expansionary monetary policy of the Federal Reserve, blamed by some for fueling the crisis, actually prevents the housing market boom from becoming too large. However on the downside, it discourages household savings and causes the fall in home prices to be deeper, due to weak household finances that result from low savings. We confront our model’s assumptions and outcomes with US economic data. We find our model assumptions are justified and simulation results are strongly supported by the data.

A study of linkages between frontier markets and the U.S. equity markets using multivariate GARCH and transfer entropy

This paper studies the integration of 20 frontier equity markets with the U.S. equity markets using variance ratios, conditional correlations and transfer entropies. The results show considerable regional variation in the level of integration. The volatility transfers, conditional correlations and transfer entropy are significantly affected by the housing market crisis of 2008–2009. The European debt crisis of 2011–2012 has less significant impact on the integration measures.

Do Increases in Subsidized Housing Reduce the Incidence of Homelessness? Evidence from the Low-Income Housing Tax Credit

The provision of affordable housing for low-income families is often cited by policymakers and advocacy groups as a necessity for ending homelessness. The U.S. government spends a considerable amount on housing programs for the nation's poor, and the use of federal housing programs to mitigate homelessness has attracted increasing interest following the recent financial downturn and housing market crisis. While important for housing policy, however, the question of whether subsidized housing is effective for combating homelessness remains unresolved. In this paper, the authors examine the impact of subsidized housing on homelessness using the Low-Income Housing Tax Credit (LIHTC), the largest place-based housing program in the United States.

Crisis Thermometer for housing market recommendations

Early warning, neural networks, expert, decision support, fuzzy and other systems, barometers, housing and real estate bubble indexes have been developed in an effort to analyze and manage crises in housing market. Scholarly literature employs various concepts of housing market crises concepts, including overheated, heating-up, stable, stagnant market, freezing, healthy housing. There are numerous interest groups operating at the meso and macro levels of the housing market who would appreciate receiving recommendations during the various stages of a crisis in the housing market. Therefore, the Crisis Thermometer for housing market recommendations was developed applying the aforementioned intellectual systems and concepts along with the long-term backgrounds of these authors.Different countries frequently select different strategies and tactics in their efforts to lessen the effects from a housing market crisis. This is entirely natural due to differing economies and markets of different countries, as well as their respective legal, institutional, technological, technical, social, cultural, political, psychological, ethical and other kinds of aspects. Traditionally an analysis of a housing market crisis is grounded on economic, legal, institutional and political aspects. Less attention is paid to social, cultural, ethical, psychological, emotional, religious, demographic, spiritual and educational aspects of crisis management. These sorts of factors are additionally used for assessing a housing market crisis with the aid of the Thermometer and for submitting personalized recommendations. The innovativeness of the Crisis Thermometer, developed by the authors herein, is primarily that it automatically determines the “temperature” of housing market, compiles numerous alternative recommendations applicable to a specific user, performs a multiple criteria analysis of these recommendations and selects out the ten most rational ones for that user. This article overviews the housing market crisis management model and its respective Thermometer and presents a practical example to demonstrate how the developed Thermometer works. This article also presents the validation of the proposed model and Crisis Thermometer.

The relationship between the housing and labor market crises and doubling up: an MSA-level analysis, 2005–2011

The Relationship between the Housing & Labor Market Crises and Doubling-Up: An MSA-Level Analysis, 2005-2010 It is now well-established that the U.S. housing market crisis preceded the labor market crisis and that, in the wake of these crises, doubling-up and cohabitation increased and homeownership fell. What is less clear is what happened at the subnational level. This study reports on: 1) how the length, severity and relative timing of both the labor market and housing crises varied by MSA; and 2) the association between the timing of the labor market and housing crises and changes in homeownership and doubling-up at the MSA level. The analysis is conducted using data on 353 MSAs, with a focus on 12 MSAs, for the period 2005 (pre-crisis) through 2010/2011. MSAs are categorized into those where the housing market declined first, those where the labor market declined first, and those where the events were concurrent. The analysis reveals that: 1) in the majority of MSAs, the labor market declined first, contrary to the national pattern and the experience of the vast majority of large MSAs; 2) there is a clear relationship between greater regional housing distress and falling homeownership rates; and 3) somewhat surprisingly, the association between changes in doubling-up and these crises are fairly weak at the MSA level. JEL Classification: R23, J12

The Effect of Foreclosure Regulation: Evidence for the US Mortgage Market at State Level

Do laws to protect borrowers curb foreclosures? This question is addressed by analysing the impact of foreclosure laws on default rates at state level in the US mortgage market. Using panel data techniques, we find a statistically significant effect of regulation on the different stages of the foreclosure process. More precisely, we analyse the effect of regulation on 60-day delinquencies and foreclosure starts, with a focus on three protective elements commonly found in state foreclosure laws, namely requiring a judicial process, granting a redemption period and banning a deficiency judgment. We find that, whereas protective states exhibit, on average, lower 60-day delinquency rates, more protection does not ultimately bring about lower foreclosure rates. Lenders seem to ration credit to mitigate costly protective laws, thereby reducing delinquency rates; but this effect is overshadowed by a moral hazard problem since, once borrowers are delinquent, they have incentives to take advantage of the protection due to the lower costs of foreclosure. We also find that the recent housing market crisis has exacerbated that behaviour. Finally, we show that lengthening the foreclosure process is no cure for the foreclosure crisis.

The Relationship between the Housing & Labor Market Crises and Doubling-Up: An MSA-Level Analysis, 2005-2010

It is now well-established that the U.S. housing market crisis preceded the labor market crisis and that, in the wake of these crises, doubling-up and cohabitation increased and homeownership fell. What is less clear is what happened at the subnational level. This study reports on: 1) how the length, severity and relative timing of both the labor market and housing crises varied by MSA; and 2) the association between the timing of the labor market and housing crises and changes in homeownership and doubling-up at the MSA level.The analysis is conducted using data on 353 MSAs, with a focus on 12 MSAs, for the period 2005 (pre-crisis) through 2010/2011. MSAs are categorized into those where the housing market declined first, those where the labor market declined first, and those where the events were concurrent. The analysis reveals that: 1) in the majority of MSAs, the labor market declined first, contrary to the national pattern and the experience of the vast majority of large MSAs; 2) there is a clear relationship between greater regional housing distress and falling homeownership rates; and 3) somewhat surprisingly, the association between changes in doubling-up and these crises are fairly weak at the MSA level.

From Infantile Citizens to Infantile Institutions: The Metaphoric Transformation of Political Economy in the 2008 Housing Market Crisis

The logic of political economy depends on a domestic metaphor, using the oikos or household as a model for the polis. Historically, this metaphor has imagined citizens as the children of a paternal state. However during the 2008 housing crisis, this metaphor was turned upside down, depicting citizens as the parents of infantile state institutions. Although initially portraying citizens as juvenile “delinquents,” the rhetoric of the mortgage crisis ultimately repositioned citizens as surrogate caretakers for Fannie Mae and Freddie Mac, the two giant politico-economic institutions that constituted the majority of the mortgage market. In this way, the rhetoric of the housing crisis inverted both the metaphorical and material structure of political economy.

Regional foreclosures and Mexican remittances: Evidence from the housing market crisis

This study investigates the extent to which Mexican workers’ remittances are affected from the recent housing market decline in the United States. Results from a multivariate model reveal that an increase in the national U.S. foreclosure rate has a negative and statistically significant impact on Mexican remittances. At the regional level, foreclosure rates of the South and the West have a significant impact on workers’ remittances in the same negative direction. However, foreclosure rates from the North Central and East Central regions do not appear to have this statistically significant impact. Lastly, in contrast to previous results in the literature, real exchange rate movements and Mexican remittances seem to be insensitive to one another once the housing market is accounted for in the analysis.

Unemployment in the Great Recession: Did the Housing Market Crisis Prevent the Unemployed from Moving to Take Jobs?

The labor market in the Great Recession and its aftermath is characterized by great difficulty in escaping unemployment. I present two empirical analyses of a particular explanation for that difficulty, that the housing market crisis has prevented the unemployed from selling their homes and moving to take new jobs. First, I examine post-job-loss mobility rates by home ownership status using data from the Displaced Workers Survey. Second, I examine mobility rates for unemployed homeowners and renters from the month-to-month CPS match. Neither analysis provides any support for the idea that the housing market crisis has reduced mobility of the unemployed.