Real estate
“Politicizing Consumer Credit,” (w/ P. Akey and S. Lewellen, 2021)
Journal of Financial Economics, 139(2): 627-655.
Powerful politicians can interfere with the enforcement of regulations. As such, expected political interference can affect constituents’ behavior. Using rotations of Senate committee chairs to identify variation in political power and expected regulatory relief, we study powerful politicians’ effect on consumer lending to communities protected by fair-lending regulations. We find a 7.5% reduction in credit access to minority neighborhoods in states with new committee chairs. Larger reductions occur in Community Reinvestment Act-eligible neighborhoods and when Senators serve on committees that oversee the enforcement of fair-lending laws. Banks headquartered in powerful Senators’ states are responsible for the reduction in credit access.
Best paper winner at MFA 2021
R&R, Review of Financial Studies
We develop modified benchmarking tests for disparate treatment that we apply to 25 years of mortgage lending. Our tests limit the scope for omitted variables by linking high-frequency mortgage decisions to an economic mechanism—loan officers have volume quotas that cause increased approval rates at month-end. We estimate that these quotas at least halve the unexplained 7 ppt Black approval gap. Loan officers more likely to miss their quotas have larger increases in Black approvals. Suggesting supply-side mechanisms, applications arrive at a constant rate within-month, and neither differences in credit risk nor applicant preferences explain the month-end decline in racial differences.
“Single Family REITs, “(w/ Giacoletti, Li, and Yu)
Coming soon
We study the growth of single-family REITs (SFRs) and their effects on local housing markets. To do so, we build a data set that connects 2010 to 2021 CoreLogic property records to ownership by SFRs and their reported holdings in 10-k filings. We find that the growth of SFRs was especially pronounced up to 2016 but has since tapered off. SFRs purchase residences in high-growth MSAs and in neighborhoods adjacent to city centers. SFRs are especially active in locations with high population growth, and a higher share of young people and minorities, but their growth is negatively related to personal incomes. Despite highly concentrated property holdings, we find that SFRs have not delivered excess returns relative to an alternative strategy of owning a broader portfolio of property in the states where they operate. Finally, adopting multiple identification strategies, we find no evidence that SFRs crowd out residential home-buyers or increase home prices, which is consistent with their low overall share of the housing stock but contrary to narratives in the popular press.
“Intergenerational Homeownership and Mortgage Distress,” (w/ N. Fritsch)
FRB-CLE Economic Commentary, June 2020.
Rates of US homeownership have declined in the past two decades, and the decline has been especially pronounced for young adults. Motivated by recent research that explores the ways in which personal experiences can affect financial attitudes and beliefs, we explore whether the negative homeownership experiences of parents during the 2008 financial crisis could have caused their children to view homeownership less favorably. We find that parental mortgage distress negatively correlates with the probability that a child will purchase a home, and we explore various channels through which this link may occur.
“Uncovering the Demand for Housing Using Internet Search Volume,” (w/ D. Kolliner and T. Stehulak)
FRB-CLE Economic Trends, 2015.