Three Essays in Housing Economics

House price exerts significant influences on various aspects in people's lives, which arouses great interests of economists. This dissertation consists of three chapters on house price: the first chapter studies spatial correlation of house prices at the state level; the second chapter studies the effect of house price on marital stability of individual families in the United States, and the last chapter studies the impact of house price on homeowners' debt stress level. Chapter one proposes a simple theoretical model to explain why house prices are correlated both spatially and temporally. A spatial autoregressive model (SAR) is employed to test the theoretical model. The empirical results are consistent with the theoretical model's predictions. We find that house prices in the home state are positively correlated with the contemporaneous house prices of its neighboring states, but negatively correlated with the house prices of its neighboring states in the previous period. Spatial patterns of the four U.S. census regions also are considered. The empirical results confirm the informational inefficiency of the housing market. Chapter two uses data from the Panel Study of Income Dynamics (PSID) and the Freddie Mac House Price Index (FMHPI) to investigate the effects of house price changes on the marital stability of individual families in the United States. Recognizing that families with divorce risk could be "locked" in their house when house price decreases, I hypothesize that a decrease in house price will reduce divorce risk. A simple theoretical model based on loss aversion theory is provided to justify the hypothesis. Using a fixed effect logit model, I find that short-term declines in house price significantly reduce the divorce risk for homeowners. The results also indicate that positive and negative price changes have asymmetric effects on marital stability, and homeowners are generally not sensitive to house price increases. Furthermore, my empirical findings indicate that families with different race, income, age and number of dependent children have heterogeneous responses to gains and losses in house prices. Chapter three uses the Consumer Finance Monthly (CFM) data set during the period from 2005 to 2012 and the Freddie Mac House Price Index (FMHPI) to investigate the impact of house price on homeowners' debt stress level. The debt stress is measured by four survey questions asking respondents about the level of their stress resulting from total debts they bear. The results indicate that a decline (rise) in nominal house price significantly increases (decreases) homeowners' debt stress level, controlling for other types of debts, such as credit card debt, home equity lines of credit, student loans, installments, bank loans, payday loans and loans from friends. The result is consistent with the intuition that people tend to have a higher stress level due to the loss of home equity and this loss of home equity also increases the possibility of foreclosure, which is occurring in states with large house price declines, and thus increases homeowners' debt stress.

Name thesis:degree_name

Doctor of Philosophy

Level thesis:degree_level

doctoral

Discipline thesis:degree_discipline

Economics

Grantor dc:publisher

The Ohio State University

Year dc:date

2013

Author dc:creator

• Li, Hanfu

Contributors dc:contributor

• Haurin, Donald

• Economics

Statement dc:rights

• unrestricted
• This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws.

Language dc:language

English

Repository record dc:identifier

http://rave.ohiolink.edu/etdc/view?acc_num=osu1366220622

OAI identifier oai:identifier

oai:etd.ohiolink.edu:osu1366220622