When Real Estate is the Only Game in Town

Hyun-Soo Choi, Harrison Hong, Jeffrey Kubik and Jeffrey Thompson

No 19798, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using data on household portfolios and mortgage originations, we find that households residing in a city with few publicly traded firms headquartered there are more likely to own an investment home nearby. Households in these areas are also less likely to own stocks. This only-game-in-town effect is more pronounced for households living in high credit quality areas, who can access financing to afford a second home. This effect also becomes pronounced for households living in low credit quality areas after 2002 when securitization made it easier for these households to buy second homes. Cities with few local stocks have in equilibrium higher price-to-rent ratios, making it more attractive to rent, and lower (primary residence) homeownership rates.

JEL-codes: G02 G11 G12 R21 R3 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-ure
Note: AP
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Citations: View citations in EconPapers (5)

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