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The Missing Homebuyers: Regional Heterogeneity and Credit Contractions

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  • Pierre Mabille

Abstract

This paper documents an unprecedented decrease in young homeownership since the Great Recession driven by regions with high house prices. Using a panel of U.S. metro areas, I calibrate an equilibrium spatial macro-finance model with overlapping generations of mobile households. The dynamics of regional housing markets is explained by an aggregate credit contraction with heterogeneous local impacts rather than by local shocks. Lower millennial income and wealth amplify its effect. The impact of subsidies to first-time buyers is dampened, because they fail to stimulate regions that suffer from larger busts. Place-based subsidies achieve larger gains.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Pierre Mabille, 2023. "The Missing Homebuyers: Regional Heterogeneity and Credit Contractions," The Review of Financial Studies, Society for Financial Studies, vol. 36(7), pages 2756-2796.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:7:p:2756-2796.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhac077
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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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