Foreclosures, House Prices, and the Real Economy

Atif Mian, Amir Sufi and Francesco Trebbi

No 16685, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: States without a judicial requirement for foreclosures are twice as likely to foreclose on delinquent homeowners. Comparing zip codes close to state borders with differing foreclosure laws, we show that foreclosure propensity and housing inventory jump discretely as one enters non-judicial states. There is no jump in other homeowner attributes such as credit scores, income, or education levels. The increase in foreclosure rates in non-judicial states persists for at least five years. Using the judicial / non-judicial law as an instrument for foreclosures, we show that foreclosures lead to a large decline in house prices, residential investment, and consumer demand.

JEL-codes: E21 E32 R31 (search for similar items in EconPapers)
Date: 2011-01
Note: EFG
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Citations: View citations in EconPapers (49)

Published as Atif Mian & Amir Sufi & Francesco Trebbi, 2015. "Foreclosures, House Prices, and the Real Economy," Journal of Finance, American Finance Association, vol. 70(6), pages 2587-2634, December.

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Journal Article: Foreclosures, House Prices, and the Real Economy (2015)
Working Paper: Foreclosures, House Prices, and the Real Economy (2011)
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