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New Construction and the Mortgage Crisis

42 Pages Posted: 28 Sep 2017  

Tom Mayock

UNC Charlotte; Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Konstantinos Tzioumis

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Date Written: September 26, 2017

Abstract

This paper argues that the combination of sharp value depreciation for newly constructed homes and the remarkable increase in residential construction during the first half of the 2000s can explain the geographic concentration of mortgage defaults during the Great Recession. We provide empirical evidence that loans for new home purchases have higher delinquency rates than loans used to purchase existing homes. We also offer some insights to explain why this performance differential exists. Our findings contribute to the emerging literature that identifies the causes of the mortgage crisis beyond the expansion of subprime lending.

Keywords: Mortgage Crisis, New Houses, Collateral Value, Housing Supply Shock

JEL Classification: G01, G21, R14, R52

Suggested Citation

Mayock, Tom and Tzioumis, Konstantinos, New Construction and the Mortgage Crisis (September 26, 2017). Available at SSRN: https://ssrn.com/abstract=3043559

Tom Mayock (Contact Author)

UNC Charlotte ( email )

Charlotte, NC 28223
United States

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th St Sw
Washington, DC 20219-0001
United States

Konstantinos Tzioumis

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

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