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Home Mortgage Debt Financing of Nonhousing Investments

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  • Jones, Lawrence D

Abstract

Home mortgage debt is decomposed into a component that represents debt demand, derived from housing demand and a residual excess demand. This excess demand derives principally from the demand for nonhousing assets. An empirical model of the determinants of the demand for excess debt is specified and estimated using databases from the 1983 and 1986 Surveys of Consumer Finance. The estimations focus on evidence of linkages between debt demand and household preferences for illiquid risky assets, and on the substitutability of personal debt for mortgage debt. Positive linkages are found between household choices of investments in vacation homes, investment real estate, and closely held business and the demand for excess debt. However, personal debt and mortgage debt appear to have largely separate financing roles. Copyright 1994 by Kluwer Academic Publishers

Suggested Citation

  • Jones, Lawrence D, 1994. "Home Mortgage Debt Financing of Nonhousing Investments," The Journal of Real Estate Finance and Economics, Springer, vol. 9(2), pages 91-112, September.
    • Handle: RePEc:kap:jrefec:v:9:y:1994:i:2:p:91-112
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    Cited by:

    1. Ling, David C. & McGill, Gary A., 1998. "Evidence on the Demand for Mortgage Debt by Owner-Occupants," Journal of Urban Economics, Elsevier, vol. 44(3), pages 391-414, November.
    2. Zeng, Jhih-Hong & Peng, Chi-Lu & Chen, Ming-Chi & Lee, Chien-Chiang, 2013. "Wealth effects on the housing markets: Do market liquidity and market states matter?," Economic Modelling, Elsevier, vol. 32(C), pages 488-495.
    3. Harding, John P. & Rosenthal, Stuart S., 2017. "Homeownership, housing capital gains and self-employment," Journal of Urban Economics, Elsevier, vol. 99(C), pages 120-135.
    4. Lin, Emily Y. & White, Michelle J., 2001. "Bankruptcy and the Market for Mortgage and Home Improvement Loans," Journal of Urban Economics, Elsevier, vol. 50(1), pages 138-162, July.
    5. Jones, Lawrence D., 1995. "Net wealth, marginal tax rates and the demand for home mortgage debt," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 297-322, June.
    6. Marsha J. Courchane & Judith A. Giles, 2002. "A Comparison of U.S. and Canadian Residential Mortgage Markets," Econometrics Working Papers 0201, Department of Economics, University of Victoria.

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