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Stimulating Housing Markets

Author

Listed:
  • Nicholas Turner

    (U.S. Department of the Treasury)

  • Eric Zwick

    (University of Chicago)

  • David Berger

    (Northwestern University)

Abstract

We estimate the effect of the 2009 and 2010 First-Time Homebuyer Tax Credit program on house purchases and prices using variation across local geographies in ex ante exposure to the program. Using this instrument and a difference-in-differences design, we find that the program induced a cumulative increase in home purchases in high exposure places nearly double that of low exposure places. We find little evidence of a sharp reversal in the post period; instead, demand appears to come from several years in the future. While the policy had a limited impact as direct fiscal stimulus, it sped the process of reallocating homes from distressed sellers to fundamental buyers, stabilized house prices, and enabled substantial deleveraging.

Suggested Citation

  • Nicholas Turner & Eric Zwick & David Berger, 2016. "Stimulating Housing Markets," 2016 Meeting Papers 227, Society for Economic Dynamics.
    • Handle: RePEc:red:sed016:227
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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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