Credit scores, race, and residential sorting
Credit scores have a profound impact on home purchasing power and mortgage pricing, yet little is known about how credit scores influence households' residential location decisions. This study estimates the effects of credit scores on residential sorting behavior using a novel mortgage industry data set combining household demographic, credit, and financial data with property location information and detailed community attribute data. I employ the data set to estimate a discrete-choice residential sorting model. I find that credit scores significantly predict residential sorting behavior and models that do not account for credit score provide biased estimates of housing utilities for black households in particular. Simulation results show that increases in credit score are associated with increases in the consumption of higher-priced homes in more expensive school districts, higher-quality public schools, and proximity to urban|metropolitan areas. © 2010 by the Association for Public Policy Analysis and Management.
Volume (Year): 29 (2010)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/journal/34787/home|
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.:
- Alicia H. Munnell, 1992.
"Mortgage lending in Boston: interpreting HMDA data,"
92-7, Federal Reserve Bank of Boston.
- Munnell, Alicia H. & Geoffrey M. B. Tootell & Lynn E. Browne & James McEneaney, 1996. "Mortgage Lending in Boston: Interpreting HMDA Data," American Economic Review, American Economic Association, vol. 86(1), pages 25-53, March.
- Robert B. Avery & Paul S. Calem & Glenn B. Canner, 2003. "An overview of consumer data and credit reporting," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Feb, pages 47-73.
- Stephen L. Ross & John Yinger, 2002. "The Color of Credit: Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182289, June.
- Irina Barakova & Raphael Bostic & Paul Calem & Susan Wachter, 2003.
"Does Credit Quality Matter for Homeownership?,"
8608, USC Lusk Center for Real Estate.
- Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March.
- Roberto Quercia & Jonathan Spader, 2008. "Does homeownership counseling affect the prepayment and default behavior of affordable mortgage borrowers?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(2), pages 304-325.
- Pennington-Cross, Anthony, 2003. "Credit History and the Performance of Prime and Nonprime Mortgages," The Journal of Real Estate Finance and Economics, Springer, vol. 27(3), pages 279-301, November.
- Xudong An & Raphael W. Bostic, 2009. "Policy incentives and the extension of mortgage credit: Increasing market discipline for subprime lending," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(3), pages 340-365.
- Sandra J. Newman, 2008. "Does housing matter for poor families? A critical summary of research and issues still to be resolved," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(4), pages 895-925.
- Elliehausen, Gregory E & Lawrence, Edward C, 1990. "Discrimination in Consumer Lending," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 156-60, February.
- Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "An Equilibrium Model of Sorting in an Urban Housing Market," NBER Working Papers 10865, National Bureau of Economic Research, Inc.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
When requesting a correction, please mention this item's handle: RePEc:wly:jpamgt:v:29:y:2010:i:1:p:39-68. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.