Down Payments and the Homeownership Dream: Not Such a Barrier After All?

Aaron Hedlund

No 1806, Working Papers from Department of Economics, University of Missouri

Abstract: This paper uses a structural model to quantitatively evaluate whether and under what conditions loose credit constraints are essential to achieving a high homeownership rate. A dichotomy emerges between the short run and long run response to a moderate tightening of credit, with homeownership initially falling before gradually reverting to its original level. When consumption and housing are complements, this long-run stability is robust to larger credit shifts,though the short-run adjustment can be severe. These results suggest that policymakers may have more latitude than thought in pursuing other objectives(e.g. macroprudential stabilization) without harming long-run homeownership.

Keywords: Homeownership; Credit Constraints; Housing; Debt; Mortgages (search for similar items in EconPapers)
Pages: 35 pages
Date: 2018-04-23
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:1806

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