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The Financial Crisis and the Role of Real Estate Investors

Author

Listed:
  • Wilbert van der Klaauw

    (Federal Reserve Bank of New York)

  • Joseph Tracy

    (Federal Reserve Bank of New York)

  • Donghoon Lee

    (Federal Reserve Bank of New York)

  • Andrew Haughwout

    (Federal Reserve Bank of New York)

Abstract

Our analysis is based on a unique administrative panel dataset based on quarterly data from consumer credit reports and covering the 1999-2009 period. The data allow us to look at all the mortgage and non-mortgage debts at the individual level and also at the household level. We follow individuals and households who have had multiple first mortgages at any point between 2004 and 2009, and track their mortgage balances and delinquencies. Preliminary results show that, initially in 2004, investors were six times safer than single mortgage holders. However, as of 2008, they contributed more than 40% of all seriously delinquent balances nationwide and were 50% more likely to be seriously delinquent than the single first mortgage holders. This suggests that there was a significant role of initially prime borrowers who invested heavily in the housing market in the course of the housing crisis.

Suggested Citation

  • Wilbert van der Klaauw & Joseph Tracy & Donghoon Lee & Andrew Haughwout, 2011. "The Financial Crisis and the Role of Real Estate Investors," 2011 Meeting Papers 201, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:201
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    Cited by:

    1. Hilber, Christian A.L. & Schöni, Olivier, 2020. "On the economic impacts of constraining second home investments," Journal of Urban Economics, Elsevier, vol. 118(C).
    2. Griffin, John M. & Kruger, Samuel & Maturana, Gonzalo, 2021. "What drove the 2003–2006 house price boom and subsequent collapse? Disentangling competing explanations," Journal of Financial Economics, Elsevier, vol. 141(3), pages 1007-1035.
    3. Chen, Denghui & Kiefer, Hua & Liu, Xiaodong, 2022. "Estimation of discrete choice network models with missing outcome data," Regional Science and Urban Economics, Elsevier, vol. 97(C).
    4. Christoph Basten & Mike Mariathasan, 2018. "How Banks Respond to Negative Interest Rates: Evidence from the Swiss Exemption Threshold," CESifo Working Paper Series 6901, CESifo.

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