Leverage and House-Price Dynamics in U.S. Cities

Owen Lamont and Jeremy C. Stein

RAND Journal of Economics, 1999, vol. 30, issue 3, 498-514

Abstract: We use city-level data to analyze the relationship between homeowner borrowing patterns and house-price dynamics. Our principal finding is that in cities where a greater fraction of homeowners are highly leveraged-- i.e., have high loan-to-value ratios--house prices react more sensitively to city-specific shocks, such as changes in per-capita income. This finding is consistent with recent theories that emphasize the role of borrowing in shaping the behavior of asset prices.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (97)

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819992 ... O%3B2-S&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: Leverage and House-Price Dynamics in U.S. Cities (1997)
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:rje:randje:v:30:y:1999:i:autumn:p:498-514

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().