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Housing equity dynamics and home improvements

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  • Bian, Xun

Abstract

In this study, we examine the effect of housing equity position, measured using the loan-to-value (LTV) ratio, on the probability of home improvements. Using 2001–2011 data from the Panel Study of Income Dynamics (PSID), we find that a higher LTV ratio, in general, reduces the probability of home improvements. We also find that the probability of home improvements depends on the recent change of housing equity position and, more importantly, on the causes of the change. Probability of home improvements decreases more when a high LTV ratio is caused by falling house prices than when it is caused by equity extraction.

Suggested Citation

  • Bian, Xun, 2017. "Housing equity dynamics and home improvements," Journal of Housing Economics, Elsevier, vol. 37(C), pages 29-41.
  • Handle: RePEc:eee:jhouse:v:37:y:2017:i:c:p:29-41
    DOI: 10.1016/j.jhe.2017.04.003
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    References listed on IDEAS

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    More about this item

    Keywords

    Loan-to-value ratio; Home improvements; Housing equity;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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