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Shifting confidence in homeownership: the Great Recession

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  • Anat Bracha
  • Julian Jamison

Abstract

The authors study the responses to several questions related to real estate that were added to the Michigan Survey of Consumers in July and August 2011. In particular, they asked about attitudes toward renting versus buying a home, about commuting, and about how much to spend on a mortgage. By matching the results to data (at the ZIP-code level) about relative house price declines during the recent crisis, they can study the relationship between the U.S. housing crash and the attitudes of individual consumers. They find that younger respondents are relatively less confident about homeownership after larger price declines, while older respondents are relatively more confident. In both cases, this is observed only for those with direct experience of loss (via themselves or someone close) during the crash. They find no effect on attitudes towards commuting, and they find that people who live in the high-decline areas believe it is appropriate to spend more on a mortgage.

Suggested Citation

  • Anat Bracha & Julian Jamison, 2012. "Shifting confidence in homeownership: the Great Recession," Public Policy Discussion Paper 12-4, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbpp:12-4
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    References listed on IDEAS

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    1. Fernando Ferreira & Joseph Gyourko, 2011. "Anatomy of the Beginning of the Housing Boom: U.S. Neighborhoods and Metropolitan Areas, 1993-2009," NBER Working Papers 17374, National Bureau of Economic Research, Inc.
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    5. Spilimbergo, Antonio & Giuliano, Paola, 2009. "Growing Up in a Recession: Beliefs and the Macroeconomy," CEPR Discussion Papers 7399, C.E.P.R. Discussion Papers.
    6. Ulrike Malmendier & Stefan Nagel, 2011. "Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 373-416.
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    Cited by:

    1. Anat Bracha & Elke U. Weber, 2012. "A psychological perspective of financial panic," Public Policy Discussion Paper 12-7, Federal Reserve Bank of Boston.
    2. Happel, Jonas & Karabulut, Yigitcan & Schäfer, Larissa & Tüzel, Şelale, 2024. "Shattered housing," Journal of Financial Economics, Elsevier, vol. 156(C).
    3. Chien-Wen Yang & Fang-Ni Chu & Wan-I Chen & Ming-Chi Chen, 2022. "Willingness to Purchase a House during Economic Lost Decades in Japanese Urban Housing Market," International Real Estate Review, Global Social Science Institute, vol. 25(3), pages 333-370.
    4. Ulrike Malmendier & Alexandra Steiny Wellsjo, 2024. "Rent or Buy? Inflation Experiences and Homeownership within and across Countries," Journal of Finance, American Finance Association, vol. 79(3), pages 1977-2023, June.
    5. Brown, Martin & Trautmann, Stefan T. & Vlahu, Razvan, 2012. "Contagious Bank Runs: Experimental Evidence," Working Papers on Finance 1207, University of St. Gallen, School of Finance.
    6. Malmendier, Ulrike M. & Steiny Wellsjo, Alex, 2020. "Rent or Buy? The Role of Lifetime Experiences on Homeownership within and across Countries," CEPR Discussion Papers 14935, C.E.P.R. Discussion Papers.
    7. Marco Angrisani & Jinkook Lee, 2016. "Health Effects of Short‐Term Fluctuations in Macroeconomic Conditions: The Case of Hypertension for Older Americans," Health Economics, John Wiley & Sons, Ltd., vol. 25(S2), pages 113-125, November.
    8. Mark R. Lindblad & Hye-Sung Han & Siyun Yu & William M. Rohe, 2017. "First-time homebuying: attitudes and behaviors of low-income renters through the financial crisis," Housing Studies, Taylor & Francis Journals, vol. 32(8), pages 1127-1155, November.

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    Keywords

    Home ownership; Mortgage loans; Recessions;
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