The Impact of Housing Market Conditions on Residential Property Upkeep

Abstract

This paper assesses the impact of housing market conditions on the theoretically motivated and empirically observed negative relationship between loan to value ratios and home maintenance expenditures. If the relationship is causal, then a down housing market will result in significantly decreased upkeep in the housing stock. The large rise and fall in home prices during the 2001-2009 period allows a unique opportunity to analyze the response of homeowners to changing housing market conditions. Data from the American Housing Survey is analyzed to confirm previous work that a negative relationship exists between loan to value ratios and routine maintenance expenditures; however, this relationship does not move in the expected direction when examined along with temporal variations in market conditions. Panel analysis reveals a more complex story. Households most likely to be at risk for default do decrease maintenance expenditures when default risk increases, but other households actually increased maintenance expenditures when the housing market conditions became less favorable. 2 IntroductionMany neighborhood-level attributes are provided largely through unmonitored

Neighborhood impact of foreclosure: A quantile regression approach

“…The negative externality can happen before the official declaration of foreclosure because homeowners at high risk of default are less financially capable and poorly incentivized to allocate resources towards home maintenance (Harding et al, 2000). Examining American Housing Survey data from the 2007 financial recession, Leonard (2013) found that homeowners at very high foreclosure risk reported lower routine maintenance expenditures while still occupying their home. During the foreclosure process, properties may be vacant for some time-further attracting vandalism and crime, which may exacerbate the blight.…”

Foreclosed and Sold: An Examination of Community and Property Characteristics Related to the Sale of REO Properties

“…However, evidence suggests that the majority of U.S. homeowners actually increased routine maintenance expenditures on their homes during the financial recession. The exception were homeowners with very low income and very low home equity (Leonard 2013).…”

“…However, evidence suggests that the majority of U.S. homeowners actually increased routine maintenance expenditures on their homes during the financial recession. The exceptions were homeowners with very low income and very low home equity (Leonard 2013). Thus, it is possible that the estimated impact of high poverty neighborhoods on the probability of resolution of the foreclosure process might be upward biased to the extent low household income is correlated with declines in routine home maintenance.…”

“Home-buying behaviour model of Generation Y in Turkey”

“…In studies conducted on young people’s housing preferences and behaviours; their support expectations from parents in home-buying (Wong, 2017), how this support mechanism is related to parents’ course of life and housing career (Albertini et al , 2018), the effects of differences between generations (Stebbing and Spies-Butcher, 2016), the effects of the features of housing market and housing policies (Leonard (2013; Visser et al , 2013; Walter et al , 2015), the effects of education debts during and after studentship (Andrew, 2010), perception of shared housing and shared living (Bricocoli and Sabatinelli, 2016), the role of social norms and family relations (Lux et al , 2017), drawbacks in accessing social assistance mechanisms are seen to be examined (McKee, 2012). The first result that calls attention among overall results of these studies is the significant fall of the ratio for Generation Y to own a house compared to the previous generation.…”