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on Housing and Real Estate |
| By: | Joshua Coven; Sebastian Golder; Arpit Gupta; Abdoulaye Ndiaye |
| Abstract: | Low property taxes amplify lock-in among elderly homeowners, limiting housing access for young families. Raising them reallocates housing toward the young through two channels: capitalization into lower prices reduces required downpayments for financially constrained buyers, a form of embedded leverage, while higher tax obligations raise holding costs for older owners. In our overlapping generations model, raising California’s property taxes to Texas levels increases young homeownership while decreasing elderly homeownership. Removing step-up basis also lowers elderly homeownership, suggesting their tenure is sustained by bequest tax advantages. The tax treatment of housing shapes housing allocation across generations. |
| JEL: | H24 H71 J11 R21 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35587 |
| By: | Angus Foulis (Bank of England and CfM); Jonathan Hazell (London School of Economics and CEPR); Atif Mian (Princeton University and NBER); Belinda Tracey (Bank of England, CEPR and CfM) |
| Abstract: | This paper estimates how rate cuts increase consumption, via debt and asset prices. Using administrative UK data on mortgages and consumption, we exploit the expiry of fixed-rate mortgages to construct six million household-level natural experiments. A 1 percentage point reduction in mortgage rates raises consumption by 3% in the following six months. Using plausibly exogenous variation in how house prices respond to rate cuts, we show that consumption increases mostly because households borrow against higher house prices; lower debt service after rate cuts matters less. These results suggest that in large part, monetary policy affects consumption through asset prices and borrowing. |
| Keywords: | Monetary policy;interest rates;consumption;household debt;asset prices. |
| JEL: | E21 E43 E52 G21 G51 R31 |
| Date: | 2026–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023295 |
| By: | Tihana Škrinjarić (Bank of England) |
| Abstract: | This paper develops a house price-at-risk framework for the UK. The model allows me to track and decompose different parts of the distribution of house price growth. The analysis covers both the national level, and nine English regions, along with Wales, Scotland, and Northern Ireland. I employ a comprehensive set of variables and indicators that could help to explain house price dynamics. My main findings are that since the 1970s, the most important predictors for the tail of the distribution have been transaction growth, changes in mortgage rate, credit to GDP gap, and financial stress. I utilise several forecasting horizons and demonstrate that this framework can be applied to forecast downside risks to house price growth and the probability of negative growth up to two years ahead. At the regional level, the analysis reveals considerable variation in the estimated coefficients for mortgage interest rates, with supply-inelastic regions showing higher values than other areas. Finally, I find that an increase in the housing supply in most regions is associated with subsequent easing of price pressures in regional markets. |
| Keywords: | House price dynamics;financial stability;quantile regression;sub-national house price growth |
| JEL: | C22 E32 E44 E58 G01 G28 |
| Date: | 2026–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023315 |
| By: | Mehmet Selman Colak; Ahmet Deryol; Mehmet Emre Samcı |
| Abstract: | [EN] In this study, based on Shapiro (2024), monthly developments in the housing markets of the 19 regions used in measuring the house price index are identified as either supply- or demand-driven, thereby decomposing changes in house prices and housing sales volumes into supply (consisting of new and second-hand housing for sale) and demand components. The findings indicate that changes in housing-sale volumes during periods of loose monetary policy are largely driven by demand-side factors, while supply constraints limit volume responses. However, this pattern reverses during periods of monetary tightening. Changes in real house price dynamics are also predominantly determined by the demand component. In recent years, however, supply-side contributions to real prices have turned negative, partially offsetting demand pressures. The toolkit provides a practical and timely indicator of dominant market pressures. [TR] Bu calismada, Shapiro (2024) esas alinarak, konut fiyat endeksinin hesaplanmasinda kullanilan 19 bolgenin konut piyasalarindaki aylik gelismelerin arz ya da talep kaynakli oldugu belirlenerek konut fiyatlari ve satis hacimlerindeki degisimler arz (yeni ve ikinci el konut arzini kapsayacak sekilde) ve talep bilesenlerine ayristirilmaktadir. Sonuclar, gevsek para politikasi donemlerinde konut satis hacimlerindeki degisimlerin buyuk olcude talep yonlu faktorler tarafindan belirlendigini, buna karsin arz kisitlarinin hacim tepkilerini sinirladigini gostermektedir. Parasal sikilasma donemlerinde ise bu egilim tersine donmektedir. Reel konut fiyat degisimlerinde de agirlikli olarak talep bileseni belirleyicidir. Son yillarda ise reel fiyatlar uzerindeki arz yonlu katkilar negatif hale gelmis, bu durum talep baskilarini kismen dengelemistir. Gelistirilen arac seti, one cikan piyasa dinamikleri icin pratik ve guncel bir gosterge olusturmaktadir. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:econot:2605 |
| By: | Liu, Teng; Constantz, Brook; Hale, Galina; Beck, Michael W |
| Abstract: | Measuring the financial value of nature is difficult, often resulting in insufficient funding directed to nature conservation and restoration. As coastal risks increase due to development and climate change, a tangible benefit of nature is the protection it offers against storm damage. Many studies from the risk industry and others assess the direct effects of wetlands for reducing damage during storms. However, the value of wetlands for coastal protection could extend to many other benefits, including home prices in areas where storms are common. We use property-level housing transaction data from Zillow and show that proximity to mangroves in Florida moderates home price decline and dispersion following major hurricanes. The effects are substantial in magnitude, reducing the probability of losing a quarter or more of the housing value by 2–7 percentage points, which corresponds to 20–40-thousand-dollar value for a million-dollar property, conditional on a hurricane. |
| Keywords: | 3501 Accounting, Auditing and Accountability (for-2020), 3502 Banking, Finance and Investment (for-2020), 35 Commerce, Management, Tourism and Services (for-2020), 13 Climate Action (sdg), climate, hurricanes, nature-based adaptation, housing, property values, Q54, G12, R31, 1501 Accounting, Auditing and Accountability (for), 1502 Banking, Finance and Investment (for), Finance (science-metrix), 3501 Accounting, auditing and accountability (for-2020), 3502 Banking, finance and investment (for-2020) |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:ucscec:qt25j2k5x7 |
| By: | Benjamin Straus; Stéphane Surprenant; Kerem Tuzcuoglu |
| Abstract: | In this note we examine how monetary policy affects housing demand, supply and prices in Canada, and whether these effects vary with labour market conditions. Using state-dependent local projections identified with narrative monetary policy shocks, we find that lower interest rates have larger effects when unemployment is low. Easing boosts resales quickly, raises housing starts with a delay, and increases house prices persistently. Because demand tends to respond more strongly than supply, monetary policy appears unable to alleviate housing affordability pressures and may instead intensify them when labour market conditions are strong. |
| Keywords: | Monetary policy; Monetary policy framework and transmission |
| JEL: | C C3 C32 E E5 E52 R R3 R31 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocsap:26-35 |
| By: | Stephen B. Billings; Sophie Calder-Wang; Weiling Liu |
| Abstract: | How does information disclosure reshape the allocation of environmental risk in the housing market? We quantify the price and distributional impact of the nationwide disclosure of property-level flood risk from First Street on U.S. housing platforms. Using a difference-in-RD design that exploits discrete cutoffs in the disclosed risk categories, we find that homes labeled as "extreme'' flood risk experience a 3.3% price discount and stay on the market for a week longer, relative to those labeled as "severe'' risk. These effects are strongest for coastal properties and remain pervasive across different FEMA floodplain designations. Disclosure also generates significant household resorting: buyers of extreme-risk homes have 5.3% lower income, are more likely to use FHA financing, and are older. Through a discrete choice model, we find that the redistribution of risk to lower-income households is primarily driven by price changes rather than heterogeneous preferences for flood risk. |
| JEL: | G14 G50 Q51 Q54 R21 R30 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35516 |
| By: | João Cocco (London Business School and CEPR); S Lakshmi Naaraayanan (London Business School and CEPR); Jagdish Tripathy (Bank of England) |
| Abstract: | We use administrative data covering the universe of mortgage originations to individual real estate investors in the United Kingdom to study financing outcomes following a large, unanticipated increase in interest rates. Post-shock, originations become more concentrated among specialist lenders, who exhibit lower interest rate pass-through for larger borrowers. To offset these smaller rate increases, they charge higher loan fees, thereby attenuating the impact of higher rates on interest-coverage ratios and facilitating credit. High-frequency evidence from loans on offer show similar responses, indicating that specialist lenders adjust product design to target specific borrower types and, in doing so, reinforce market segmentation. |
| Keywords: | Mortgages;interest rates;fees;loan underwriting;market segmentation |
| JEL: | D1 G5 R21 E43 |
| Date: | 2026–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023298 |
| By: | Mahmoud Fatouh (Bank of England); Benjamin Guin (Bank of England); Haluk Unal (University of Maryland) |
| Abstract: | We study product innovation in the UK mortgage market by analysing when and how attributes outside the traditional structure of mortgage contracts become pricing relevant. To do so, we develop a stylised framework that treats mortgage products as structured bundles of attributes, focusing on the two-part tariff, comprising interest rates and fees, to infer innovation from pricing patterns. Our empirical strategy first uses transaction-level data and exploits within-product variations over time to detect when new product features affect pricing, which we apply to the case of green mortgages. Matching Energy Performance Certificates (EPCs) to UK mortgage originations, we show that EPCs become pricing-relevant in 2018, with lenders starting to offer pricing discounts for loans to buy properties with higher energy efficiency. We also use offer-level data on advertised green products to precisely estimate pricing discounts. We detect considerable green discounts, which reach up to 15 basis points in 2022. Mortgages against high EPC properties are concentrated in new buildings, suggesting relaxed credit constraints and increased housing investment, with implications for the broader economy. |
| Keywords: | Product innovation;green mortgages;housing construction;economic growth |
| JEL: | G21 O31 R31 |
| Date: | 2026–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023289 |
| By: | Vedanta Dhamija (Bank of England); Ricardo Nunes (University of Surrey); Roshni Tara (Bank of England) |
| Abstract: | Housing is a closely monitored and prominent sector for households. We find that households in the United States tend to overweight house price expectations when forming inflation expectations with a coefficient of 25%–45%, significantly above the weight of house prices in the inflation index. We first use two data sets, a multitude of controls, and an instrumental variable approach to address endogeneity. We then use a second strategy based on household heterogeneity. As expected, we find a significant effect of numeracy skills and whether households moved house recently. We model this household behaviour in a two-sector New Keynesian model with an overweighted and a non-overweighted sector and show that overweighted sectors are disproportionately more important for monetary policy. |
| Keywords: | Salience;inflation expectations;house price expectations;monetary policy |
| JEL: | D10 E12 E31 E52 E58 |
| Date: | 2026–01–23 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023291 |
| By: | Walls, Margaret A. (Resources for the Future) |
| Abstract: | Homeowners insurance markets in the United States have exhibited issues in recent years. Premiums are on the rise, obtaining and keeping coverage has become difficult, and the coverage provided by insurance has not kept up with the costs of repair and rebuilding. News stories of problems in insurance markets abound, especially in the wake of major disaster events such as the January 2025 Los Angeles wildfires (Darmiento 2025).In this issue brief, I describe what we know and don’t know about four major trends in homeowners insurance markets: (1) rising premiums, (2) increasing numbers of policy cancellations and nonrenewals, (3) growth in residual market plans (often referred to as “insurance of last resort”), and (4) coverage gaps. I synthesize the trends and findings from a rapidly growing body of research in finance and economics.Insurance acts as an important risk transfer mechanism, shifting the financial burden of infrequent but high-cost weather events from individual households to a diversified pool of risk-bearers. This function not only protects valuable household assets but also enables insurance to serve as a key pillar of US housing and mortgage markets. The four problems examined in this issue brief represent distinct ways in which this financial arrangement is coming under strain. |
| Date: | 2026–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-26-07 |
| By: | Veronica B. Bayangos (Bangko Sentral ng Pilipinas); Arno Mikhail Azcarraga (Bangko Sentral ng Pilipinas) |
| Abstract: | Real estate crises underscore the sector’s central role in systemic risk transmission. This study provides new evidence on how real estate firms and non-bank financial institutions shape financial stability within the Philippines’ conglomerate-based financial system. Using high-frequency stock data from 2013–2025, it applies optimal candlestick spot volatility estimators and ΔCoVaR to quantify spillovers. Property shocks strongly affect both banks and non-banks, with the latter amplifying stress. Large banks remain resilient, while smaller ones show greater downside sensitivity, revealing asymmetric contagion and flight-to-safety behavior. Contagion intensifies within conglomerates, highlighting complex intra-group linkages and their implications for financial stability oversight. |
| JEL: | G01 G21 G23 C58 E58 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bhd:dpaper:202515 |
| By: | Aniruddha Rajan (Bank of England); Francesc Rodriguez-Tous (Bayes Business School, City St. George’s, University of London); Francesc Salgado-Moreno (Bank of England) |
| Abstract: | We study how monetary policy affects the fixation structure of mortgage contracts, a feature that is crucial for how household consumption adjusts following changes in policy rates. Using loan‑level data covering the universe of residential mortgages in the UK, we show that lenders do not adjust the relative supply of mortgages with different fixation lengths in response to changes in the level of interest rates, but they do so following changes in the term spread. Monetary policy‑induced increases in the slope of the yield curve cause lenders to increase the supply of longer‑fixation mortgages. This effect is particularly strong for lenders with a greater share of fixed‑rate mortgages in their existing portfolios – consistent with an interest rate risk management motive – as well as during expansionary monetary policy episodes. When monetary policy is contractionary, however, increases in the term spread lead banks to increase the supply of shorter as compared to longer‑fixation mortgages. Finally, we find that the choice of monetary policy instrument has material – and directionally opposing – implications for the supply of mortgages at different fixation lengths. |
| Keywords: | Monetary policy;bank lending;household finance;mortgages;local projections |
| JEL: | E43 E52 G21 G51 |
| Date: | 2025–11–28 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023280 |