• 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.

  • Do Housing Choice Voucher Holders Live Near Good Schools?

    The Housing Choice Voucher program was created, in part, to help low-income households reach a broader range of neighborhoods and schools. This study explores whether low-income households use the flexibility provided by vouchers to reach neighborhoods with high performing schools. "Do Housing Choice Voucher holders live near good schools?" was published in the Journal of Housing Economics in March 2014.

  • Essay: Sticky Seconds—The Problems Second Liens Pose to the Resolution of Distressed Mortgages

    To better understand whether and how second liens might prevent efficient resolutions of borrower distress and to assess how second lien holders could be encouraged to cooperate with efficient resolutions without undermining the financial interests of the banks, we reviewed existing data and research, as well as debates among both academics and industry experts about the role second liens might be playing in slowing the recovery of the housing market. This article reports the results of our research and the roundtable discussion. It first explores what we know about the prevalence and delinquency rates of different types of second liens, the extent to which banks are exposed to losses on the liens, and the extent to which the banks already have accounted for those expected losses. It then reviews the various reasons that second liens have interfered with the efficient resolution of distressed mortgages, and documents advances that recently have been made in addressing those problems. Finally, the article examines the most promising proposals for reducing the transaction costs and frictions that are behind many of the current problems second liens are posing, as well as proposals to prevent similar problems from arising in the future. We focus our analysis of solutions on programs to remove barriers to greater coordination between first and second lien holders, rather than on the incentive approaches that have already been attempted.

  • High Stakes in the Classroom, High Stakes on the Street: The Effects of Community Violence on Students’ Standardized Test Performance.

    This paper examines the effect of exposure to violent crime on students’ standardized test performance among a sample of students in New York City public schools. To identify the effect of exposure to community violence on children’s test scores, we compare students exposed to an incident of violent crime on their own blockface in the week prior to the exam to students exposed in the week after the exam. The results show that such exposure to violent crime reduces performance on English Language Arts assessments, and no effect on Math scores. The effect of exposure to violent crime is most pronounced among African Americans, and reduces the passing rates of black students by approximately 3 percentage points.

  • Housing Policy in New York City: A Brief History

    Published in April 2006, this paper tells the story of housing policy in New York City over the past 30 years. The report describes the city’s unprecedented efforts to rebuild its housing stock during the late 1980s and 1990s and analyzes the specific features of the New York City’s 10-year plan that made these efforts so successful. In addition, the report describes New York City’s current housing environment and policy challenges.

  • Loan Modifications: What Works

    We use a unique dataset that combines data on loan, borrower, property, and neighborhood characteristics of modified mortgages on properties in New York City to examine the determinates of successful modifications. From November 2007 through March 2011, over 2.1 million mortgages were modified in the United States, and policymakers have heralded such modifications as a key to addressing the ongoing foreclosure crisis. This dataset includes both HAMP modifications and proprietary modifications. The analysis builds upon a prior paper in which the determinants of loan modifications were examined.

  • Localized Commercial Effects from Natural Disasters: The Case of Hurricane Sandy and New York City

    This paper considers the localized economic impacts of an extreme event, Hurricane Sandy, on a dense and diverse economy, New York City. It isolates establishments that are more dependent on local customers--retail establishments--to test whether or not they are more vulnerable to hurricane-induced flooding than other entities with geographically dispersed consumer bases. The paper exploits variation in micro-scale exposure to pre-storm risk and post-storm inundation to identify the impact of storm-induced flooding on establishment survival, employment and sales revenues. Results indicate that the neighborhood economic losses from Sandy were significant, persistent, and concentrated among retail businesses that tend to serve a more localized consumer base.

  • Low-Income Housing Policy

    The United States government devotes about $40 billion each year to means-tested housing programs, plus another $6 billion or so in tax expenditures on the Low Income Housing Tax Credit (LIHTC). What exactly do we spend this money on, why, and what does it accomplish? The authors focus on these questions. They begin by reviewing the history of low-income housing programs in the U.S., and then summarize the characteristics of participants in means-tested housing programs and how programs have changed over time. The authors consider important conceptual issues surrounding the design of and rationale for means-tested housing programs in the U.S. and review existing empirical evidence, which is limited in important ways. Finally, we conclude with thoughts about the most pressing questions that might be addressed in future research in this area.

  • Maintenance and Investments in Small Rental Properties: Findings from New York City and Baltimore

    Nearly half of all poor, urban renters in the United States live in rental buildings of fewer than four units, and such buildings make up nearly half our nation’s rental housing stock. Yet small rental properties remain largely overlooked by researchers. We present two reports—from New York City and Baltimore—both providing suggestive evidence, drawn from a variety of sources, about the characteristics of small rental housing. We find that while small buildings offer lower rents and play a crucial role in housing low-income renters, these lower rents are largely explained by neighborhood location. Ownership matters, however. In New York, lower rents are associated with small buildings with resident landlords. Further, we also find better unit conditions in small rental buildings when compared to most larger properties, especially in small buildings with resident landlords. In Baltimore, we find that smaller-scale “mom-and-pop” owners dominate the small rental property market, but that the share of larger-scale owners increases in higher poverty areas of the city. The properties owned by these larger-scale owners receive fewer housing code violations and that these owners appear to invest more frequently in major improvements to their properties.

  • Pathways After Default: What Happens to Distressed Mortgage Borrowers and Their Homes?

    We use a detailed dataset of seriously delinquent mortgages to examine the dynamic process of mortgage default – from initial delinquency and default to final resolution of the loan and disposition of the property. We estimate a two-stage competing risk hazard model to assess the factors associated with whether a borrower behind on mortgage payments receives a legal notice of foreclosure, and with what ultimately happens to the borrower and property. In particular, we focus on a borrower’s ability to avoid a foreclosure auction by getting a modification, by refinancing the loan, or by selling the property. We find that the outcomes of the foreclosure process are significantly related to: the terms of the loan; the borrower’s credit history; current loan-to-value and the presence of a junior lien; the borrower’s post-default payment behavior; the borrower’s participation in foreclosure counseling; neighborhood characteristics such as foreclosure rates, recent house price depreciation and median income; and the borrower’s race and ethnicity.