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The homeownership gap

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  • Andrew Haughwout
  • Richard Peach
  • Joseph Tracy

Abstract

After rising for a decade, the U.S. homeownership rate peaked at 69 percent in the third quarter of 2006. Over the next two and a half years, as home prices fell in many parts of the country and the unemployment rate rose sharply, the homeownership rate declined by 1.7 percentage points. An important question is, how much more will this rate decline over the current economic downturn? To address this question, we propose the concept of the "homeownership gap" as a gauge of downward pressure on the homeownership rate. We define the homeownership gap as the difference between the "official" homeownership rate and a recomputed rate that excludes owners who are in a negative equity position, meaning that the value of their houses is less than their outstanding mortgage balance. Our estimate of this gap suggests that the official homeownership rate will likely experience significant downward pressure in the coming years.

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Bibliographic Info

Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 418.

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Date of creation: 2009
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Handle: RePEc:fip:fednsr:418

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Related research

Keywords: Home ownership ; Recessions ; Mortgages;

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Cited by:
  1. Sam Schulhofer-Wohl, 2010. "Negative equity does not reduce homeowners' mobility," Working Papers 682, Federal Reserve Bank of Minneapolis.
  2. Michael Brocker & Christopher Hanes, 2013. "The 1920s American Real Estate Boom and the Downturn of the Great Depression: Evidence from City Cross-Sections," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 161-201 National Bureau of Economic Research, Inc.
  3. Andrew Haughwout & Sarah Sutherland & Joseph Tracy, 2013. "Negative equity and housing investment," Staff Reports 636, Federal Reserve Bank of New York.
  4. Konstantin A. Kholodilin & Andreas Mense, 2011. "Can Internet Ads Serve as an Indicator of Homeownership Rates?," Discussion Papers of DIW Berlin 1168, DIW Berlin, German Institute for Economic Research.
  5. Lauren Lambie-Hanson, 2013. "When does delinquency result in neglect?: mortgage delinquency and property maintenance," Public Policy Discussion Paper 13-1, Federal Reserve Bank of Boston.
  6. Lynn Fisher & Lauren Lambie-Hanson & Paul S. Willen, 2010. "A profile of the mortgage crisis in a low-and-moderate-income community," Public Policy Discussion Paper 10-6, Federal Reserve Bank of Boston.

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