Do Homeowners Mark to Market? A Comparison of Self-reported and Estimated Market Home Values During the Housing Boom and Bust
This paper examines homeowners’ self-reported values in the American Housing Survey and the Health and Retirement Study from the start of the recent housing price run-ups through recent price declines. It compares zip code level market-based estimates of housing prices to those derived from homeowners’ self-reported values. The paper shows that there are systematic differences which vary with market conditions and the amount of equity owners hold in their homes. When prices have fallen, homeowners systematically state that their homes are worth more than market estimates suggest, and homeowners with little or no equity in their homes state values above the market estimates to a greater degree. Over time, homeowners appear to adjust their assessments to be more in line with past market trends, but only slowly. The results suggest that underwater borrowers are likely to understate their losses and either may not be aware that their mortgages are underwater or underestimate the degree to which they are.
The story of the Great Recession cannot be told without addressing housing and, in particular, the dramatic decline in housing prices that began in late 2006. A distinctive feature of the Great Recession is its intimate connection to the housing sector; indeed many would argue that the Great Recession was triggered by the widespread failure of risky mortgage products. Whatever the sources of the Great Recession may have been, the housing sector is still deeply troubled and is a key contributor to our ongoing economic duress. This recession brief lays out the main features of the downturn in the housing sector. It was produced as part of a series on the economic and social fallout of the recession in conjunction with the Russell Sage Foundation and the Stanford Center on Poverty and Inequality.
Household energy consumption is crucial to national energy policy. This article analyzes how the rules covering utility costs in the four major federal housing assistance programs alter landlord and tenant incentives for energy efficiency investment and conservation. We conclude that, relative to market-rate housing, assistance programs provide less incentive to landlords and tenants for energy efficiency investment and conservation, and utilities are more likely to be included in the rent. Using data from the American Housing Survey, we examine the differences in utility billing arrangements between assisted and unassisted low-income renters and find that—even when controlling for observable building and tenant differences—the rent that assisted tenants pay is more likely to include utilities. Among all tenants who pay utility bills separately from rent, observable
differences in energy expenses for assisted and unassisted tenants are driven by unit, building, and household characteristics rather than the receipt of government assistance.