The Sensitivity of Housing Demand to Financing Conditions: Evidence from a Survey

Andreas Fuster and Basit Zafar

American Economic Journal: Economic Policy, 2021, vol. 13, issue 1, 231-65

Abstract: Measuring the sensitivity of housing demand to mortgage rates and available leverage is challenging because there is generally no exogenous variation in these variables. This paper circumvents this issue by designing a strategic survey in which respondents report their willingness to pay (WTP) for a home under different financing scenarios. Relaxation of down payment constraints or an exogenous increase in nonhousing wealth has large effects on WTP, especially for poorer and more credit-constrained households. However, changing the mortgage rate has only moderate effects on WTP. These findings have implications for theoretical models of house price determination and for policy.

JEL-codes: G21 G51 R21 R38 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pol.20150337 (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20150337.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20150337.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: The sensitivity of housing demand to financing conditions: evidence from a survey (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:13:y:2021:i:1:p:231-65

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/pol.20150337

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().