Dynamics of Housing Debt in the Recent Boom and Great Recession
This paper documents a number of key facts about the evolution of mortgage debt, homeownership, debt burden, and subsequent delinquency during the recent housing boom and Great Recession. We show that the mortgage expansion was shared across the entire income distribution; that is, the flow and stoc...
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| Format: | Article |
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University of Chicago Press
2019
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| Online Access: | http://hdl.handle.net/1721.1/121093 https://orcid.org/0000-0002-3658-9131 |
| _version_ | 1811095690978263040 |
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| author | Adelino, Manuel D. Schoar, Antoinette Severino Diaz, Felipe |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Adelino, Manuel D. Schoar, Antoinette Severino Diaz, Felipe |
| author_sort | Adelino, Manuel D. |
| collection | MIT |
| description | This paper documents a number of key facts about the evolution of mortgage debt, homeownership, debt burden, and subsequent delinquency during the recent housing boom and Great Recession. We show that the mortgage expansion was shared across the entire income distribution; that is, the flow and stock of debt rose across all income groups (except for the top 5%). The mortgage expansion was especially pronounced in areas with increased house prices, and the speed at which houses turned over (churn) in these areas went up significantly. However, the average loan-to-value ratios (LTV) at origination did not increase over the boom period. While homeownership rates increased for the middle- and upper-income households, there was no increase in homeownership for the lowest income groups. Finally, default rates postcrisis went up predominantly in areas with large house price drops, especially for high-income and high-FICO borrowers. These results are consistent with a view that the run-up in mortgage debt over the precrisis period was driven by rising home values and expectations of increasing prices. |
| first_indexed | 2024-09-23T16:24:39Z |
| format | Article |
| id | mit-1721.1/121093 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T16:24:39Z |
| publishDate | 2019 |
| publisher | University of Chicago Press |
| record_format | dspace |
| spelling | mit-1721.1/1210932022-09-29T19:48:02Z Dynamics of Housing Debt in the Recent Boom and Great Recession Adelino, Manuel D. Schoar, Antoinette Severino Diaz, Felipe Sloan School of Management Adelino, Manuel D. Schoar, Antoinette Severino Diaz, Felipe This paper documents a number of key facts about the evolution of mortgage debt, homeownership, debt burden, and subsequent delinquency during the recent housing boom and Great Recession. We show that the mortgage expansion was shared across the entire income distribution; that is, the flow and stock of debt rose across all income groups (except for the top 5%). The mortgage expansion was especially pronounced in areas with increased house prices, and the speed at which houses turned over (churn) in these areas went up significantly. However, the average loan-to-value ratios (LTV) at origination did not increase over the boom period. While homeownership rates increased for the middle- and upper-income households, there was no increase in homeownership for the lowest income groups. Finally, default rates postcrisis went up predominantly in areas with large house price drops, especially for high-income and high-FICO borrowers. These results are consistent with a view that the run-up in mortgage debt over the precrisis period was driven by rising home values and expectations of increasing prices. 2019-03-26T13:56:14Z 2019-03-26T13:56:14Z 2018-04 2019-02-28T15:41:28Z Article http://purl.org/eprint/type/JournalArticle 0889-3365 1537-2642 http://hdl.handle.net/1721.1/121093 Adelino, Manuel, Antoinette Schoar, and Felipe Severino. “Dynamics of Housing Debt in the Recent Boom and Great Recession.” NBER Macroeconomics Annual 32, no. 1 (April 2018): 265–311. https://orcid.org/0000-0002-3658-9131 http://dx.doi.org/10.1086/696054 NBER Macroeconomics Annual Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf University of Chicago Press University of Chicago Press |
| spellingShingle | Adelino, Manuel D. Schoar, Antoinette Severino Diaz, Felipe Dynamics of Housing Debt in the Recent Boom and Great Recession |
| title | Dynamics of Housing Debt in the Recent Boom and Great Recession |
| title_full | Dynamics of Housing Debt in the Recent Boom and Great Recession |
| title_fullStr | Dynamics of Housing Debt in the Recent Boom and Great Recession |
| title_full_unstemmed | Dynamics of Housing Debt in the Recent Boom and Great Recession |
| title_short | Dynamics of Housing Debt in the Recent Boom and Great Recession |
| title_sort | dynamics of housing debt in the recent boom and great recession |
| url | http://hdl.handle.net/1721.1/121093 https://orcid.org/0000-0002-3658-9131 |
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