Drive 'Til You Qualify: Credit quality and household location

    Authors

    A. Hanson; K. Schnier;G. K. Turnbull

    Comments

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    Abbreviated Journal Title

    Reg. Sci. Urban Econ.

    Keywords

    Mortgage quality; Spatial concentration; HOUSING DEMAND; PROPERTY-VALUES; EMPLOYMENT; JURISDICTIONS; FORECLOSURES; REGRESSION; CITIES; Economics; Environmental Studies; Urban Studies

    Abstract

    A deeper understanding of the credit-sorting process is essential when considering the extent to which home foreclosures are driven by price contagion or an underlying spatial pattern of mortgage quality. Adapting household location theory, we find that credit constrained households follow "drive-'til-you-qualify" behavior leading to rising credit quality with distance from the CBD while unconstrained households exhibit declining credit quality. Individual level mortgage loan-to-income data for the 100 largest MSAs show credit constrained behavior either throughout the urban area or concentrated in the suburbs. Meta analysis of the credit sorting estimates identify MSA characteristics associated with each pattern. (C) 2011 Elsevier B.V. All rights reserved.

    Journal Title

    Regional Science and Urban Economics

    Volume

    42

    Issue/Number

    1-2

    Publication Date

    1-1-2012

    Document Type

    Article

    Language

    English

    First Page

    63

    Last Page

    77

    WOS Identifier

    WOS:000300029200006

    ISSN

    0166-0462

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