Risks and Incentives in Underserved Mortgage Markets
Subsidized loans may help increase home ownership in low income neighborhoods with positive social benefits, however there are risks and costs to the homeowners themselves. Home ownership increases incentives to maintain property and neighborhood, as well as decreasing the outflow of rents from low-income zones. These benefits, however are not costless to participants. With a mortgage comes the possibility of a default, the financial demands of maintenance, the reduction in alternate investment opportunities, an increased exposure to fluctuations in local economic conditions, and a drastic reduction in the liquidity of personal wealth. In this paper we examine the role of the owner-occupied house in the asset allocation decision of a family living in an area characterized as a low income neighborhood. We find that the current subsidies are likely to be too low relative to the costs. In particular, the tax law makes home ownership relatively less attractive to low-income families. This may explain a lack of home-ownership and thus, mortgage lending in low-income neighborhoods.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Karl E. Case & Robert J. Shiller, 1987.
"Prices of Single Family Homes Since 1970: New Indexes for Four Cities,"
Cowles Foundation Discussion Papers
851, Cowles Foundation for Research in Economics, Yale University.
- Karl E. Case & Robert J. Shiller, 1987. "Prices of single-family homes since 1970: new indexes for four cities," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 45-56.
- Karl E. Case & Robert J. Shiller, 1987. "Prices of Single Family Homes Since 1970: New Indexes for Four Cities," NBER Working Papers 2393, National Bureau of Economic Research, Inc.
- Murphy, Kevin J., 1985. "Corporate performance and managerial remuneration : An empirical analysis," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 11-42, April.
- Arthur Kennickell & Janice Shack-Marquez, 1992. "Changes in family finances from 1983 to 1989: evidence from the Survey of Consumer Finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jan, pages 1-18.
- Goetzmann, William Nelson, 1993.
"The Single Family Home in the Investment Portfolio,"
The Journal of Real Estate Finance and Economics,
Springer, vol. 6(3), pages 201-22, May.
- Goetzmann, W.N., 1990. "The Single Family Home In The Investment Portfolio," Papers fb-_90-15, Columbia - Graduate School of Business.
- Jensen, Michael C & Murphy, Kevin J, 1990.
"Performance Pay and Top-Management Incentives,"
Journal of Political Economy,
University of Chicago Press, vol. 98(2), pages 225-64, April.
- Karl E. Case & Robert J. Shiller, 1990.
"Forecasting Prices and Excess Returns in the Housing Market,"
Real Estate Economics,
American Real Estate and Urban Economics Association, vol. 18(3), pages 253-273.
- Karl E. Case & Robert J. Shiller, 1990. "Forecasting Prices and Excess Returns in the Housing Market," NBER Working Papers 3368, National Bureau of Economic Research, Inc.
- Barton A. Smith & William P. Tesarek, 1991. "House Prices and Regional Real Estate Cycles: Market Adjustments in Houston," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(3), pages 396-416.
- John R. Knight & C. F. Sirmans & Geoffrey K. Turnbull, 1998. "List Price Information in Residential Appraisal and Underwriting," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 59-76.
When requesting a correction, please mention this item's handle: RePEc:eee:jhouse:v:7:y:1998:i:3:p:274-285. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.