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The Impacts of Borrowing Constraints on Homeownership

  • Peter Linneman
  • Susan Wachter

This paper utilizes microdata to directly quantify the impact of mortgage underwriting criteria on individual homeownership propensities. To determine whether a family is constrained by these criteria, the optimal home purchase price is estimated. The results indicate that wealth and income constraints both reduce homeownership propensities, with a stronger impact for wealth constraints. Mortgage market innovations of the early 1980s seem to have reduced these effects. The research indicates, however, that even in well-developed capital markets, the presence of borrowing constraints adversely affects homeownership propensities. Copyright American Real Estate and Urban Economics Association.

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Article provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.

Volume (Year): 17 (1989)
Issue (Month): 4 ()
Pages: 389-402

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Handle: RePEc:bla:reesec:v:17:y:1989:i:4:p:389-402
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