IDEAS home Printed from https://ideas.repec.org/a/eee/jhouse/v63y2024ics1051137723000578.html
   My bibliography  Save this article

The impact of subsidies on house prices in Mexico's mortgage market for low-income households 2008–2019

Author

Listed:
  • Ramírez Sierra, Gabriel Darío
  • González Martínez, Alayn Alejandro
  • Monroy Cruz, Miguel Ángel
  • Zapata Barrientos, Luis Gerardo

Abstract

We estimate the effect of Mexico's primary house-purchase subsidy program for low-income individuals on house prices between 2008 and 2019, using administrative records from Infonavit, the nation's largest mortgage originator. We employ a fuzzy regression discontinuity design that leverages the existence of a threshold on the borrower's income that determined access to the subsidy program to identify the effect on house prices. Our estimations yield statistically significant evidence that the subsidy led to an average increase in house prices of 863 US dollars for the program participants at the threshold during those years. This effect represents 28.9 % of the average subsidy amount and 5.4 % of the average house price. The estimations control for individual, house, and location characteristics. Furthermore, we find evidence that when an intermediary is involved in the mortgage application process, there is a statistically significant price difference of 867 dollars for subsidy recipients. On the contrary, this impact disappears when no external broker is involved. These intermediaries are primarily real estate developers that build and sell the houses associated with the mortgages. These findings shed light on how market structure could have nonnegligible impacts on equilibrium outcomes and on the welfare effects of economic policy.

Suggested Citation

  • Ramírez Sierra, Gabriel Darío & González Martínez, Alayn Alejandro & Monroy Cruz, Miguel Ángel & Zapata Barrientos, Luis Gerardo, 2024. "The impact of subsidies on house prices in Mexico's mortgage market for low-income households 2008–2019," Journal of Housing Economics, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:jhouse:v:63:y:2024:i:c:s1051137723000578
    DOI: 10.1016/j.jhe.2023.101970
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1051137723000578
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhe.2023.101970?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sebastian Calonico & Matias D. Cattaneo & Rocio Titiunik, 2014. "Robust data-driven inference in the regression-discontinuity design," Stata Journal, StataCorp LP, vol. 14(4), pages 909-946, December.
    2. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    3. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
    4. Sebastian Calonico & Matias D. Cattaneo & Max H. Farrell & Roc ́ıo Titiunik, 2017. "rdrobust: Software for regression-discontinuity designs," Stata Journal, StataCorp LP, vol. 17(2), pages 372-404, June.
    5. Alvin Murphy, 2018. "A Dynamic Model of Housing Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 243-267, November.
    6. Ian Fillmore, 2021. "Price Discrimination and Public Policy in the U.S. College Market," Working Papers 2021-028, Human Capital and Economic Opportunity Working Group.
    7. Joseph Gyourko & Albert Saiz, 2006. "Construction Costs And The Supply Of Housing Structure," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 661-680, October.
    8. Mark J. Garmaise, 2004. "Confronting Information Asymmetries: Evidence from Real Estate Markets," The Review of Financial Studies, Society for Financial Studies, vol. 17(2), pages 405-437.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mellace, Giovanni & Ventura, Marco, 2019. "Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy," Discussion Papers on Economics 9/2019, University of Southern Denmark, Department of Economics.
    2. Christian Ochsner, 2023. "Hostility, Population Sorting, and Backwardness: Quasi-Experimental Evidence from the Red Army after WWII," CERGE-EI Working Papers wp768, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Parada, Cecilia, 2024. "Fertility responses to cash transfers in Uruguay," World Development Perspectives, Elsevier, vol. 33(C).
    4. Pasquini, Ricardo A., 2021. "Effects of regulating the brokerage commission in the rental market: Evidence from Buenos Aires," Journal of Housing Economics, Elsevier, vol. 54(C).
    5. Fang, Hongsheng & Su, Yunqing & Lu, Weijun, 2022. "Tax incentive and corporate financial performance: Evidence from income tax revenue sharing reform in China," Journal of Asian Economics, Elsevier, vol. 81(C).
    6. Angelo D'Andrea, 2019. "Mayor’s wage and Public procurement," BAFFI CAREFIN Working Papers 19125, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    7. Myerson, Rebecca & Lu, Tianyi & Yuan, Yong & Liu, Gordon, 2020. "The impact of government income transfers on tobacco and alcohol use: Evidence from China," Economics Letters, Elsevier, vol. 186(C).
    8. Masayuki Sawada & Takuya Ishihara & Daisuke Kurisu & Yasumasa Matsuda, 2024. "Local-Polynomial Estimation for Multivariate Regression Discontinuity Designs," Papers 2402.08941, arXiv.org.
    9. Mellace, Giovanni & Ventura, Marco, 2023. "The short-run effects of public incentives for innovation in Italy," Economic Modelling, Elsevier, vol. 120(C).
    10. Wilhelmsson, Mats, 2022. "What is the impact of macroprudential regulations on the Swedish housing market?," Journal of Housing Economics, Elsevier, vol. 57(C).
    11. Burgherr, David, 2022. "Behavioral Responses to a Pension Savings Mandate : Quasi-experimental Evidence from Swiss Tax Data," CAGE Online Working Paper Series 645, Competitive Advantage in the Global Economy (CAGE).
    12. Onda, Masayuki & Seyler, Edward, 2020. "English learners reclassification and academic achievement: Evidence from Minnesota," Economics of Education Review, Elsevier, vol. 79(C).
    13. Miguel Ángel Carpio & Lucero Gómez & Pablo Lavado, 2021. "Does social health insurance spillover to student performance? Evidence from an RDD in Peru," Working Papers 178, Peruvian Economic Association.
    14. Anil Kumar, 2018. "Do Restrictions on Home Equity Extraction Contribute to Lower Mortgage Defaults? Evidence from a Policy Discontinuity at the Texas Border," American Economic Journal: Economic Policy, American Economic Association, vol. 10(1), pages 268-297, February.
    15. Ritashree Chakrabarti & Junfu Zhang, 2015. "Unaffordable housing and local employment growth: Evidence from California municipalities," Urban Studies, Urban Studies Journal Limited, vol. 52(6), pages 1134-1151, May.
    16. Sanchez-Vidal, Maria, 2019. "Retail shocks and city structure," LSE Research Online Documents on Economics 103394, London School of Economics and Political Science, LSE Library.
    17. Sebastian Calonico & Matias D Cattaneo & Max H Farrell, 2020. "Optimal bandwidth choice for robust bias-corrected inference in regression discontinuity designs," The Econometrics Journal, Royal Economic Society, vol. 23(2), pages 192-210.
    18. Vitola, Alise & Grigoriadis, Theocharis, 2018. "Diversity & empire: Baltic Germans & comparative development," Discussion Papers 2018/6, Free University Berlin, School of Business & Economics.
    19. Monras, Joan, 2015. "Economic Shocks and Internal Migration," IZA Discussion Papers 8840, Institute of Labor Economics (IZA).
    20. Matias D. Cattaneo & Rocío Titiunik & Gonzalo Vazquez-Bare, 2020. "Analysis of regression-discontinuity designs with multiple cutoffs or multiple scores," Stata Journal, StataCorp LP, vol. 20(4), pages 866-891, December.

    More about this item

    Keywords

    Housing market; Mortgage market; Housing subsidies; Price discrimination;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhouse:v:63:y:2024:i:c:s1051137723000578. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622881 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.