Liquidity and Information Asymmetry in the Real Estate Market
Posted: 27 Jun 2012
Date Written: June 26, 2012
This paper draws on six waves of Japanese household longitudinal data (Keio Household Panel Survey, KHPS) and estimates a conditional fixed effects logit model to investigate the effects of housing equity constraints and income shocks on own-to-own residential moves in Japan. By looking at contemoraneous extended Loan-to-value (ELTV) and extended Debt-to-Income (EDTI) ratios under the recourse loan system, we examine whether housing equity constraints and negative income shocks have any impact on own-to-own residential moves. Taking account of the specific nature of the recourse loan system in Japan, we further investigate whether these effects are different between positive and negative equity households. The estimation results show that housing equity constraints and negative income shocks significantly deter own-to-own residential moves for positive equity households.
Keywords: Residential mobility, Housing equity constraint, Conditional fixed effects logit model, Loan-to-value ratio, Debt-to-income ratio, Negative equity, Japan, Recourse loan
JEL Classification: R21, C51, G21
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