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Does credit quality matter for homeownership?

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  • Barakova, Irina
  • Bostic, Raphael W.
  • Calem, Paul S.
  • Wachter, Susan M.

Abstract

It has been long recognized that there are a number of barriers that limit access to homeownership for some households, most importantly, downpayment constraints. This paper extends the literature to test for the role of credit quality in limiting access to homeownership. Results show that both wealth and credit quality based constraints significantly reduce the likelihood of whether individuals and households opt to own a home. The wealth constraint has the largest impact, although its importance declined substantially during the 1990s due to the increased availability of low-downpayment mortgages. In contrast to the declining influence of wealth-based constraints, credit quality based constraints have become more important barriers to homeownership during the 1990s, mostly reflecting an increase in the number of households with impaired credit quality.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Housing Economics.

Volume (Year): 12 (2003)
Issue (Month): 4 (December)
Pages: 318-336

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Handle: RePEc:eee:jhouse:v:12:y:2003:i:4:p:318-336

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Web page: http://www.elsevier.com/locate/inca/622881

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  1. Bostic, Raphael W & Surette, Brian J, 2001. "Have the Doors Opened Wider? Trends in Homeownership Rates by Race and Income," The Journal of Real Estate Finance and Economics, Springer, vol. 23(3), pages 411-34, November.
  2. Robert B. Avery & Raphael W. Bostic & Paul S. Calem & Glenn B. Canner, 1996. "Credit risk, credit scoring, and the performance of home mortgages," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 621-648.
  3. Robert B. Avery & Raphael W. Bostic & Paul S. Calem & Glenn B. Canner, 2000. "Credit Scoring: Statistical Issues and Evidence from Credit-Bureau Files," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(3), pages 523-547.
  4. Peter Linneman & Susan Wachter, 1989. "The Impacts of Borrowing Constraints on Homeownership," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(4), pages 389-402.
  5. Robert B. Avery & Paul S. Calem & Glenn B. Canner, 2003. "An overview of consumer data and credit reporting," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Feb, pages 47-73.
  6. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  7. Quercia, Roberto G. & McCarthy, George W. & Wachter, Susan M., 2003. "The impacts of affordable lending efforts on homeownership rates," Journal of Housing Economics, Elsevier, vol. 12(1), pages 29-59, March.
  8. Peter M. Zorn, 1989. "Mobility-Tenure Decisions and Financial Credit: Do Mortgage Qualification Requirements Constrain Homeownership?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(1), pages 1-16.
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