Acolin, Arthur. (2020). Housing Wealth and Consumption over the 2001-2013 Period: The Role of the Collateral Channel. Journal Of Housing Research, 29(1), 68 – 88.
Abstract
This study estimates changes in the relationship between housing wealth and consumption among homeowners during the recent housing boom and bust in the United States, focusing on the period 2001-2007, during which house prices increased and financial innovations led to an increased availability of products enabling households to extract home equity; and on the period 2007-2013, during which house prices declined and home equity withdrawal products became largely unavailable. The estimated elasticity of consumption with regard to housing wealth increased in 2004 and 2007 (.06) relative to 2001 (.04). The estimated elasticities then decreased in 2010 and 2013 (to below .04). In addition, the increase was larger among borrowing constrained households than unconstrained households. No relationship between housing prices and consumption was found among renters. These additional tests for subpopulations support the hypothesis that the increase in consumption out of housing wealth occurred through the collateral channel.
Keywords
Consumption (economics); Wealth; Product Elimination; Equity (real Property); Home Prices; Home Ownership; United States; Collateral Channel; Credit And Consumption; Housing Wealth Effects; Housing; Housing Costs; Estimates; Prices; Households; Consumption; Equity; Borrowing; Hypotheses; Innovations; Elasticity Of Demand; Propensity To Consume; Housing Prices; Lines Of Credit; Mortgages; Subpopulations; Collateral; United States--us