A Regional Look at the Role of House Prices and Labor Market Conditions in Mortgage Default

43 Pages Posted: 19 Dec 2012

See all articles by Sonya Waddell

Sonya Waddell

Federal Reserve Banks - Federal Reserve Bank of Richmond

Anne Davlin

Federal Reserve Banks - Federal Reserve Bank of Richmond

Edward S. Prescott

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Date Written: January 1, 2011

Abstract

A linear fixed effects statistical model is used to study variations in foreclosure rates across metropolitan statistical areas in the Fifth Federal Reserve District. We find that variations in local labor market conditions and house prices do a remarkable job of capturing variation in foreclosure rates. We study the regional variation in foreclosure rates in more detail by examining two localities in our district: Prince William County, Virginia, and Charlotte, North Carolina. Finally, the model is used to provide forecasts of foreclosure rates conditioned on possible paths of labor market conditions and house prices.

Suggested Citation

Waddell, Sonya and Davlin, Anne and Prescott, Edward (Ned) Simpson, A Regional Look at the Role of House Prices and Labor Market Conditions in Mortgage Default (January 1, 2011). FRB Richmond Economic Quarterly, vol. 97, no. 1, First Quarter 2011, pp. 1-43. Available at SSRN: https://ssrn.com/abstract=2190603

Sonya Waddell

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Anne Davlin

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Edward (Ned) Simpson Prescott (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

P.O. Box 6387
Cleveland, OH 44101
United States

HOME PAGE: http://https://www.clevelandfed.org/people-search?pid=f8ca941e-4b51-41f6-95f8-c87f1d3806e5

Register to save articles to
your library

Register

Paper statistics

Downloads
13
Abstract Views
397
PlumX Metrics