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This paper surveys research on homelessness. The emphases are on the last decade, rather than earlier; and the United States, rather than the rest of the world. The approach is more idiosyncratic than encyclopedic. The field has been converging on the conclusion that housing subsidies are the most attractive policy for reducing homelessness, but the optimal arrangement of subsidies is not obvious. Economists have much to contribute, in both theory—mechanism design and general equilibrium—and empirics. Aggregate-level studies can be used more for finding out what the effects of different policies are, and individual-level studies can be used more for assessing the costs and benefits of those effects. [ABSTRACT FROM AUTHOR]

This paper revisits the interactions between housing dynamics and the business cycle in a two-sector model developed and calibrated from the multi-sector neoclassical growth model originally envisioned by Davis and Heathcote in 2005. A two-sector model with housing sector specific capital and productivity shocks can successfully predict a correct positive correlation between housing prices and residential investment. The model can also replicate the fact observed in the United States that housing prices are more volatile than output. [ABSTRACT FROM AUTHOR]

This paper provides evidence that economic self-interest associated with homeownership affects voter turnout in local elections in the United States. Compared to renters, homeowners are financially invested in their communities and are less mobile. Therefore, homeowners should care more about local policies and have incentives to engage actively in local politics. The disparity in political participation between homeowners and renters, however, should diminish in presidential elections for which policy discussions are more targeted at the national-level. These hypotheses are tested using census block group-level election panel data. Fixed effects models and a control function approach are used to identify the effect of homeownership on voter turnout in off-year mayoral elections relative to presidential elections. Results show that mayoral election voter turnout increases with the local homeownership rate. This suggests that local policies may tend to cater to the tastes of homeowners over renters. [ABSTRACT FROM AUTHOR]

Racial segregation is a salient feature of cities in the United States. Models like Schelling (1971) show that segregation can arise through white preferences for residing near minorities. Once the threshold or “tipping point” is passed, the models predict that all whites will leave. Our paper uses census-tract data for six cities in the United States from the 1930s and 1970–2010 to measure decadal, city-specific tipping points. We use a structural break procedure to estimate the tipping points and incorporate these in a regression-discontinuity design to estimate the impact on population trends for neighborhoods that exceed that threshold while controlling for city-specific trends in migration. We find that the magnitude of white flight for neighborhoods that have tipped in 2000 has fallen to between 23% and 36% of the level seen in 1970. There was no discontinuity in white flight after accounting for migration trends during the Great Depression. Finally, we show that in-migration of minorities in tipped neighborhoods do not fill in the gap left by white flight. [ABSTRACT FROM AUTHOR]

For much of the 20th century, America's central cities were viewed as synonymous with economic and social hardship, and often used as proxy for low-income communities of color. Since the 1990s, however, many metropolitan areas have seen a resurgence of interest in central city neighborhoods. Theoretical models of income sorting lead to ambiguous predictions about where households of different income levels will live within metropolitan areas. In this paper, we explore intra-city spatial patterns of income and race for U.S. metropolitan areas, focusing particularly on the locations of low-income and minority neighborhoods. Results indicate that, on average, neighborhood income increases with distance to city centers for blacks, Hispanics and Asians. Income among non-Hispanic whites is uncorrelated with distance to CBD. All MSAs exhibit spatial clustering of poor and non-white neighborhoods. Economic sorting within high-minority neighborhoods is apparent for all racial groups. [ABSTRACT FROM AUTHOR]

This paper describes the dynamics of racial desegregation over forty years in 51 large US metropolitan areas , examining how the initial racial compositions of neighborhoods affect the later racial composition of the neighborhood and overall metropolitan area desegregation. After documenting integration arising from the increasing dispersion of black households across neighborhoods that were entirely, or disproportionately, non-black, we identify a stark exception: non-blacks do not move to neighborhoods that are over-90% black. The surprise is that, while the mean proportions of metropolitan black populations residing in such highly segregated neighborhoods decreased, the numbers of such neighborhoods actually increased in most metropolitan areas. The expansions of black neighborhoods, even as segregation decreases, pose challenges for local development and for continued racial integration. [ABSTRACT FROM AUTHOR]

• Small landlords and landlords of color disproportionately struggled with rent collection both prior to and during the pandemic. • Pandemic-induced rental revenue declines alone cannot explain landlords' changing business practices. • Landlords were more likely to take punitive actions against tenants in communities of color than in white communities holding constant rental payment rates, both before and during the pandemic. • Elevated rates of property disinvestment during the pandemic have implications for the viability and affordability of the housing stock for years to come. This paper uses a survey of over 2500 rental property owners in ten cities across the United States to determine the impact of the COVID-19 pandemic on landlords' rent collection and business behavior. Our findings show that yearly rent collection was down significantly in 2020 relative to 2019—both within and across rental markets—and that an increasing number of owners have a large share of their portfolio behind on rent. Small owners and owners of color faced the highest exposure to deep tenant arrears in 2020, challenges they were also more likely to face prior to pandemic. Our findings show that owner business practices changed dramatically in 2020, with a higher share of landlords granting tenants rent extensions or forgiving back rent during the pandemic relative to prior. However, many owners also disinvested in their rental properties through deferred maintenance, missed mortgage payments, and property sale listings. Landlords of color pursued disinvestment strategies during the pandemic at an elevated rate compared to white landlords. Owners of properties in neighborhoods with more non-white residents were both more likely to experience decreased rent collection and more likely to pursue evictions and rental late fees holding constant rental payment rates, implying the pandemic has disproportionately affected renters in communities of color. Overall, our findings highlight the strain the pandemic has placed on the housing stock, which has implications for the long-term viability and affordability of many of these units. More concerningly, our results show that households of color—which have been disproportionately affected by the pandemic in other domains—were more likely to face punitive measures from landlords in both 2019 and 2020, suggesting the pandemic has exacerbated existing racial inequality in housing markets. [ABSTRACT FROM AUTHOR]

In this paper we examine the effect of immigration into the U.S. on the U.S. housing market, both in terms of rents and single family house prices. We model the housing market in a spatial econometrics context using the spatial Durbin model. This approach helps us exploit and capture both the direct and indirect effects of immigration inflows on the U.S. housing market. We find that an increase in immigration inflows into a particular MSA is associated with increases in rents and with house prices in that MSA while also seeming to drive up rents and prices in neighboring MSAs. The patterns observed in the rental and house price markets, along with the larger spillover effects, are consistent with native-flight from immigrant receiving areas. [ABSTRACT FROM AUTHOR]

This paper examines low- and moderate-income households in the City of Philadelphia who are becoming homeowners for the first time. We examine two Nehemiah developments subsidized by the City of Philadelphia that offer newly constructed homes at well-below cost. This paper uses a unique survey of these new owners to measure what Nehemiah residents gain in terms of structure and community attributes as they make the transition from renting to owning. The new owners in the Nehemiah complexes significantly improve their housing structures while raising their exposure to crime and weak local public schools. As part of the City’s community development strategy, these developments were expected to increase economic activity near these sites. We document that there is no evidence of local benefit spillovers for census tracts where the Nehemiah developments were built. Our survey results suggest that the new housing developments represent an “oasis” where there are few interactions between the new homeowners and the incumbent residents of the greater community. [Copyright &y& Elsevier]

While an understanding of spatial spillovers and feedbacks in housing markets could provide valuable information for location decisions, little known research has examined this issue for the US Metropolitan Statistical Areas (MSAs). Also, it is unknown whether there can be differences in the spatial effects before and after a major housing “bust”. In this paper we examine spatial effects in house price dynamics. Using panel data from 363 US MSAs for 1996 to 2013, we find that there are significant spatial diffusion patterns in the growth rates of urban house prices. Lagged price changes of neighboring areas show greater effects after the 2007–08 housing crash than over the entire sample period of 1996–2013. In general, the findings are robust to controlling for potential endogeneity, and for various spatial weights specifications (including contiguity weights and migration flows). These results underscore the importance of considering spatial spillovers in MSA-level studies of housing price growth. [ABSTRACT FROM AUTHOR]

The cyclical movement of housing prices likely affects the supply of and demand for credit for home purchases, but little is known about how this process might influence differential access to credit between minority and non-minority borrowers. This paper uses data reported through the Home Mortgage Disclosure Act (HMDA) over the period 1990–2013 to estimate the relationship between annual metropolitan area-level house price inflation and the extent to which Black borrowers are denied relative to ‘comparable’ White borrowers on their loan applications. The results indicate that, on average, Black borrowers are denied more frequently than White borrowers, but this difference in denial rates decreases significantly as house prices rise more rapidly. Such results demonstrate the importance of considering local housing market conditions when using HMDA data to assess lender compliance with fair lending laws. [ABSTRACT FROM AUTHOR]

This paper investigates the likelihood and timing of housing tenure choice dynamics including both the initial transition to homeownership, and possible transitions back to rental tenure and to an additional owned home. This is done across the German Socio-Economic Panel (GSOEP) and the Panel Study of Income Dynamics (PSID). Further, housing price data is added for both countries. For the US, data from the Federal Housing Finance Agency (FHFA) and Census data were used construct measures of house price appreciation and the relative cost of owning to renting. For Germany, proprietary data from BulwienGesa AG was used to construct comparable indices. Observed differentials in tenure transitions appear to be consistent with the differences in housing and mortgage market conditions, as well as the tax treatment of owned homes across the two nations. In particular, while there is substantial house price appreciation in the US, on average house prices fall over the same period in Germany. In addition, mortgage interest is not tax deductible in Germany, alternative mortgage options available in the US are not prevalent there, and down payment requirements are much greater. Consequently, German households have a much lower probability of homeownership and there is only a small likelihood of those who initially achieve homeownership returning to rental tenure or moving to another owned home. In contrast, households in the United States have a very high likelihood of homeownership, but the housing market appears much more volatile with a high likelihood that households will return to rental tenure, and subsequently achieve homeownership for a second time during the period of observation. [ABSTRACT FROM AUTHOR]

Abstract: Throughout the last decade, mortgage markets experienced both a considerable decline and a considerable increase in the share served by the FHA. Concerns have grown about the solvency of the program and about the access to credit of the borrowers served by the FHA market. These concerns are due, at least in part, to the evolving distribution of loans in the FHA portfolio and uncertainty about future patterns of lending. This paper attempts to explain FHA lending patterns over the past decade, particularly the dramatic downs and ups of FHA lending. We pay particular attention to the drivers of these changes, and the implications of these changes for FHA lending, mortgage markets, and associated public policy initiatives. [Copyright &y& Elsevier]

Highlights: [•] This paper estimates the impact of the GSE Act’s affordable housing goals. [•] I analyze HMDA data using a regression discontinuity design. [•] I find that the goals increased GSE purchases from very low-income borrowers. [•] I find no evidence that the goals increased lending to underserved populations. [Copyright &y& Elsevier]

Abstract: One unresolved issue arising from the use of eminent domain power involves how the perceived benefits and costs of eminent domain power affect people’s positions on the reform of eminent domain and police power law. The paper addresses this issue by estimating a voting model that explains voters’ decisions on eminent domain and police power reform referenda in the US. Estimates indicate that eminent domain referendum outcomes hinged on voters’ fundamental values and ideology, and voters’ immediate self-interest. Voters’ fundamental values and ideology affects referendum outcomes insofar as educational attainment in a county has a statistically significant effect on support for reform. Despite the greater incidence of eminent domain in low income and poorer communities, success of reform referenda in this study was found to be greater in counties with higher incomes and lower unemployment rates. This implies that whatever asymmetry exists in the exercise of eminent domain law across income groups does not affect voter reaction to eminent domain reforms. Moreover, counties with high unemployment rates consider the larger potential benefits from urban renewal projects in vote decision-making providing a link between self-interest and voting behavior. [Copyright &y& Elsevier]

Abstract: This paper examines the efficiency of eminent domain used to acquire green spaces, situations in which private investment permanently destroys the ecological externality value of land. The real option approach takes into account this irreversibility and changes established conclusions for the reversible investment case. Under irreversibility, eminent domain efficiency is more sensitive to compensation rules than previously thought. Setting compensation equal to what market value would be in the absence of eminent domain—the approach taken in the US and many other countries—reduces efficiency relative to losing the ecological externality to private development. Compensating at the market value under eminent domain threat increases efficiency, but not as much as compensation at social value does. [ABSTRACT FROM AUTHOR]

Abstract: The hedonic modeling literature is rich with analyses of the importance of public school quality on real estate markets. In this paper, spatial dependency is incorporated in a hedonic model based on housing, neighborhood, demographic, and school quality attributes readily available on the Internet for home sales in Howard County, Maryland. The importance of using readily available measures is that perceptions in the public are formed by them. The study also addresses potential omitted variable bias by incorporating school assessment measures over the K-12 grade range. The consideration of spatial dependency in hedonic models is imperative since the findings are sensitive to appropriately modeling the spatial component of home prices. The results indicate that there is consistent and significant evidence of the capitalization of 8th grade test scores and SAT scores in home prices, and inconsistent evidence of the capitalization of 3rd grade test scores. The elasticities of house price with respect to test scores are all in the inelastic range and smaller than those found in other studies. This study provides clear guidance on how to test for spatial heterogeneity and non-normality of error terms before proceeding with hedonic analysis. [Copyright &y& Elsevier]

Abstract: African Americans in the United States are considerably less likely to own their homes compared to Whites. Differences in household income and other socio-economic and demographic characteristics can only partially explain this gap and previous studies suggest that the ‘unexplained’ gap has increased over time. In this paper we use the Panel Study of Income Dynamics (PSID) intergenerational data, which provides information on household wealth, parental characteristics and location choice. We find that African–American households are 6.5 percent less likely to own if only traditional explanatory variables are controlled for. However, the black–white homeownership gap disappears if differences in wealth and in the preferred location type (i.e., a broad location classification based on the degree of urbanization of the place of residence) are accounted for. [Copyright &y& Elsevier]

Abstract: In the first half of this decade, US house prices experienced significant real rates of appreciation. The dramatic increase in house prices led some economists to conclude that there was a speculative bubble in the US housing market. This paper explores how much of the recent appreciation in US house prices was attributable to the fundamental economic determinants of house prices. On the demand side, we note that the rate of homeownership in the US increased from 66.8% in 1999 to 69% in the fourth quarter of 2005. http://www.census.gov/hhes/www/housing/hvs/historic/histt14.html, accessed 10/17/2007. Each percentage point increase in the homeownership rate increases the demand for owner-occupied housing by about one million units. On the supply side, land prices and housing construction costs increased substantially in real terms over this period. The national average increase in house prices conceals significant spatial variation in appreciation rates. According to OFHEO, house prices in some California cities increased by more than fifteen percent per year during this period while house prices in Texas cities increased four percent per year. The increase in aggregate housing demand had different effects on metropolitan area house prices because housing market supply elasticities vary spatially. We estimate housing supply elasticities for 133 metropolitan areas and conclude that although areas on the East Coast and in California had large observed price increases, they owe much of their house price increases to inelastic supplies of owner-occupied housing. [Copyright &y& Elsevier]

Due to moving and transactions costs, most housing buyers do not routinely move in response to small changes in income or housing price. In this paper, the “own–rent,” “move–stay,” and length-of-stay decisions are modeled as multi-period optimization in the presence of transactions costs. The empirical section uses the American Housing Survey to provide a unique 12-year panel of household stayers for the Detroit metropolitan area. Results indicate that income and value–rent measures in different years have separable and significant impacts on housing demand. Estimated full income elasticities are between 0.30 and 0.35. [Copyright &y& Elsevier]

The Section 8 Existing Housing Program, currently the largest housing program administered by HUD, provides subsidies to low-income families living in privately-owned rental units of their own choosing. Under current rules and budgets, funds have not been sufficient to serve all eligible families willing to participate in the program, and public housing agencies have not limited assistance to the poorest eligible families. Instead, they serve many families above the poverty line while denying assistance to the majority of those below it. A simple proposal for targeting more assistance to the poorest families and eliminating the horizontal inequity resulting from offering assistance to some, but not all, families with the same characteristics is to decrease the subsidy at each income level by the same amount while continuing to spend the program''s current budget. One objection to this proposal is that the poorest eligible families would not be able to find units meeting the program''s space and quality standards if subsidies were lower. This paper finds that the program''s subsidy to the poorest eligible families greatly exceeds the minimum rent of units meeting the program''s standards. It also shows that the most common objections to reducing subsidy levels under the program are inconsistent with existing evidence or standard economic theory. Finally, it argues for converting the Section 8 Existing Housing Program into an entitlement program for the poorest eligible families. [Copyright &y& Elsevier]

During the early 1990s, Section 8 vouchers were touted by the US Department of Housing and Urban Development (HUD) as the way to provide greater housing choice for the poor while also deconcentrating them. Toward the end of the 1990s, however, evidence mounted that the voucher system was not deconcentrating the poor. In response, HUD developed a set of five major demonstration programs that supplemented the vouchers with various arrays of social services. While waiting for results of these programs to return, HUD discovered that Section 8 participants in local housing authorities in Alameda County, California, were experiencing an unexpected amount of interjurisdictional mobility toward suburban locations. Using a local database of 16,951 Section 8 families and both logit and multinomial logit analysis, this paper presents a cursory examination into the motivations of their suburban mobility. [Copyright &y& Elsevier]

This paper examines the impact of Federal Housing Administration (FHA) mortgage insurance activity on homeownership at two levels: census tract and metropolitan area. The 1990 Home Mortgage Disclosure Act dataset combined with the 1980 and 1990 U.S. Censuses is used in the analysis. This study extends the previous studies of FHA activity by having broader coverage, a better measure of relative FHA activity and better control of other factors that affect homeownership and mortgage activity. The empirical results indicate that the FHA mortgage insurance program has significant positive effects on homeownership in predominantly white and/or moderate to high-income MSAs and predominantly minority and/or moderate- to high-income census tracts. However, the estimated coefficients associated with the relative FHA activity are found to be relatively small in magnitude. Overall, results suggest that FHA programs are of limited effect in the achievement of homeownership, but may be of greater assistance to whites relative to blacks. [Copyright &y& Elsevier]