Template-Type: ReDIF-Paper 1.0
Author-Name: Lu Han
Author-X-Name-First: Lu
Author-X-Name-Last: Han
Author-Email: lu.han@rotman.utoronto.ca
Author-Workplace-Name: Rotman School of Management, University of Toronto
Author-Name: Chandler Lutz
Author-X-Name-First: Chandler
Author-X-Name-Last: Lutz
Author-Email: cl.eco@cbs.dk
Author-Workplace-Name: Department of Economics, Copenhagen Business School
Author-Name: Benjamin Sand
Author-X-Name-First: Benjamin
Author-X-Name-Last: Sand
Author-Email: bmsand@yorku.ca
Author-Workplace-Name: Department of Economics, York University
Author-Name: Derek Stacey
Author-X-Name-First: Derek
Author-X-Name-Last: Stacey
Author-Email: dstacey@economics.ryerson.ca
Author-Workplace-Name: Department of Economics, Ryerson University
Title: Do Financial Constraints Cool a Housing Boom?
Abstract:  We study the housing market implications of financial constraints by exploiting a regulatory change that withholds access to mortgage insurance when homes sell for $1 million or more, effectively increasing the downpayment requirement at the threshold. We motivate our listing and sales price analysis by advancing a model of competing auctions with constrained bidders. Using Toronto data, we find sharp excess bunching for homes listed but not sold at $1M, along with changes to bidding intensity around the $1M threshold. Everything considered, our analysis points to the importance of designing macroprudential policies that recognize the strategic responses of market participants.
Length: 67 pages
Creation-Date: 2018-07
Number: 073
File-URL: http://economics.ryerson.ca/workingpapers/wp073.pdf
File-Format: Application/pdf
Handle: RePEc:rye:wpaper:wp073