The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s

59 Pages Posted: 22 Mar 2010 Last revised: 28 Sep 2010

See all articles by Price V. Fishback

Price V. Fishback

University of Arizona; National Bureau of Economic Research (NBER)

Alfonso Flores-Lagunes

Syracuse University--Economics; Syracuse University--CPR; IZA, Bonn

William C. Horrace

Syracuse University - Department of Economics

Shawn Kantor

National Bureau of Economic Research (NBER)

Jaret Treber

Kenyon College - Department of Economics

Date Written: March 2010

Abstract

Problems with mortgage financing are widely considered to be a major cause of the recent financial meltdown. Several modern programs have been designed to mimic the Home Owners' Loan Corporation of the 1930s. The HOLC replaced the toxic assets on the balance sheets of financial institutions by buying troubled mortgages and then refinanced the mortgages to allow home owners to avoid losing their homes. We analyze the impact of the HOLC on the nonfarm rental and owned home markets after developing a new data set for over 2800 counties in the United States. In counties with fewer than 50,000 people, where financial markets were not as well developed as in larger cities, the HOLC's financial interventions helped stimulate the demand for owned housing more than it influenced the supply. In rental markets the HOLC appears to have contributed to an increase in the supply of rental housing that was likely associated the improvement of the balance sheets of lending institutions.

Suggested Citation

Fishback, Price V. and Flores-Lagunes, Alfonso and Horrace, William C. and Kantor, Shawn and Treber, Jaret, The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s (March 2010). NBER Working Paper No. w15824. Available at SSRN: https://ssrn.com/abstract=1574643

Price V. Fishback (Contact Author)

University of Arizona ( email )

Tucson, AZ 85721-0108
United States
520-621-4421 (Phone)
520-621-8450 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alfonso Flores-Lagunes

Syracuse University--Economics ( email )

Syracuse, NY 13244-1020
United States

HOME PAGE: http://www.maxwell.syr.edu/econ/cpr/Alfonso_Flores_Lagunes/

Syracuse University--CPR ( email )

Syracuse, NY 13244
United States

HOME PAGE: http://www.maxwell.syr.edu/econ/cpr/Alfonso_Flores_Lagunes/

IZA, Bonn ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/profile?key=2305

William C. Horrace

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States
315-443-9061 (Phone)
315-443-1081 (Fax)

HOME PAGE: http://faculty.maxwell.syr.edu/whorrace

Shawn Kantor

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jaret Treber

Kenyon College - Department of Economics ( email )

Gambier, OH 43022
United States

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