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Drive 'Til You Qualify: Credit quality and household location

Author

Listed:
  • Hanson, Andrew
  • Schnier, Kurt
  • Turnbull, Geoffrey K.

Abstract

A deeper understanding of the credit-sorting process is essential when considering the extent to which home foreclosures are driven by price contagion or an underlying spatial pattern of mortgage quality. Adapting household location theory, we find that credit constrained households follow “drive-'til-you-qualify” behavior leading to rising credit quality with distance from the CBD while unconstrained households exhibit declining credit quality. Individual level mortgage loan-to-income data for the 100 largest MSAs show credit constrained behavior either throughout the urban area or concentrated in the suburbs. Meta analysis of the credit sorting estimates identify MSA characteristics associated with each pattern.

Suggested Citation

  • Hanson, Andrew & Schnier, Kurt & Turnbull, Geoffrey K., 2012. "Drive 'Til You Qualify: Credit quality and household location," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 63-77.
  • Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:63-77
    DOI: 10.1016/j.regsciurbeco.2011.06.001
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    References listed on IDEAS

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    Cited by:

    1. Anping Chen & Marlon Boarnet & Mark Partridge & Haifang Huang & Brad R. Humphreys, 2014. "New Sports Facilities And Residential Housing Markets," Journal of Regional Science, Wiley Blackwell, vol. 54(4), pages 629-663, September.
    2. Huang, Haifang & Humphreys, Brad, 2012. "Do New Sports Facilities Revitalize Urban Neighborhoods? Evidence from Residential Mortgage Applications," Working Papers 2012-5, University of Alberta, Department of Economics.
    3. Huang, Haifang & Humphreys, Brad & Zhou, Li, 2014. "Urban Casinos and Local Housing Markets: Evidence from the US," Working Papers 2014-4, University of Alberta, Department of Economics.

    More about this item

    Keywords

    Mortgage quality; Spatial concentration;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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