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- Title
House Prices and Credit Constraints: Making Sense of the US Experience.
- Authors
Duca, John V.; Muellbauer, John; Murphy, Anthony
- Abstract
Most US house price models break down in the mid-2000s, due to the omission of exogenous changes in mortgage credit supply (associated with the sub-prime mortgage boom) from house price-to-rent ratio and inverted housing demand models. Previous models lack data on credit constraints facing first-time home-buyers. Incorporating a measure of credit conditions - the cyclically adjusted loan-to-value ratio for first-time buyers - into house price-to-rent ratio models yields stable long-run relationships, more precisely estimated effects, reasonable speeds of adjustment and improved model fits.
- Subjects
UNITED States; HOME prices; HOUSING; MORTGAGES; 20TH century United States economy; ECONOMIC models; CREDIT control
- Publication
Economic Journal, 2011, Vol 121, Issue 552, p533
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1111/j.1468-0297.2011.02424.x