Abstract

http://ssrn.com/abstract=2373179
 


 



When Real Estate is the Only Game in Town


Hyun-Soo Choi


Singapore Management University

Harrison G. Hong


Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Jeffrey D. Kubik


Syracuse University - Department of Economics

Jeffrey P. Thompson


Federal Reserve Board; University of Massachusetts Amherst

December 26, 2013


Abstract:     
Using data on household portfolios and mortgage originations, we find that households residing in a city with few publicly traded firms headquartered there are more likely to own an investment home nearby. Households in these areas are also less likely to own stocks. This only-game-in-town effect is more pronounced for households living in high credit quality areas, who can access financing to afford a second home. This effect also becomes pronounced for households living in low credit quality areas after 2002 when securitization made it easier for these households to buy second homes. Cities with few local stocks have in equilibrium higher price-to-rent ratios, making it more attractive to rent, and lower (primary residence) homeownership rates.

Number of Pages in PDF File: 56

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Date posted: December 31, 2013 ; Last revised: April 12, 2014

Suggested Citation

Choi, Hyun-Soo and Hong, Harrison G. and Kubik, Jeffrey D. and Thompson, Jeffrey P., When Real Estate is the Only Game in Town (December 26, 2013). Available at SSRN: http://ssrn.com/abstract=2373179 or http://dx.doi.org/10.2139/ssrn.2373179

Contact Information

Hyun-Soo Choi (Contact Author)
Singapore Management University ( email )
Lee Kong Chian School of Business
50 Stamford Road
Singapore 178899, 178899
Singapore
Harrison G. Hong
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Jeffrey D. Kubik
Syracuse University - Department of Economics ( email )
426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-9063 (Phone)
315-443-1081 (Fax)
Jeffrey P. Thompson
Federal Reserve Board ( email )
Washington, DC
United States
University of Massachusetts Amherst ( email )
Amherst, MA 01003
United States
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