Sustainable Homeownership

29 Pages Posted: 22 Mar 2009

See all articles by Paul Calem

Paul Calem

Board of Governors of the Federal Reserve System

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Marsha Courchane

Charles River Associates (CRA)

Date Written: March 19, 2009

Abstract

Rapidly changing credit and housing market conditions of the past fifteen years have markedly impacted home ownership rates. Home ownership rates in the United States have increased steadily and significantly from 1995 to 2004, from 64 percent to 69 percent. No additional increase in home ownership, in the aggregate, occurred with the expansion of non prime lending after 2004. By year-end 2008, the overall U.S. home ownership rate had fallen to a level below that of 2002. As delinquencies and foreclosures mount, putting the nation's homeowners and the economy at risk, home ownership rates continue to decline.

We review the evidence pertaining to home ownership rates, explore the possible role of financial institutions in increasing home ownership in sustainable and unsustainable ways, and address the role of regulation. We review evidence suggesting how flexible lending initiatives have expanded access to home ownership. We also examine the role of non prime lending and the consequences of housing market price instability for home ownership. Fluctuations in the availability of credit for home ownership, and the global credit market collapse raise questions that we cannot answer here about the mistakes that have contributed to the current housing crisis. Nonetheless, evidence on market outcomes allows us at least to raise such questions, and explore the role of regulation in supporting responsible mortgage lending that encourages sustainable home ownership.

Keywords: Homeownership, Mortgage Lending, Subprime Lending

JEL Classification: G21, G28

Suggested Citation

Calem, Paul and Wachter, Susan M. and Courchane, Marsha, Sustainable Homeownership (March 19, 2009). Available at SSRN: https://ssrn.com/abstract=1365436 or http://dx.doi.org/10.2139/ssrn.1365436

Paul Calem

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

Marsha Courchane (Contact Author)

Charles River Associates (CRA) ( email )

1201 F Street, NW
Suite 700
Washington, DC 20004
United States

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