journal article
Jun 30, 1998
Mortgage Market Induced Booms and Busts in the Housing Market in a Modified DiPasquale-Wheaton Model
Abstract
In this paper, we offer a nontechnical pedagogical tool that demonstrates the interrelationship between the mortgage market and the housing market. While the importance of the mortgages in the housing market is well established in the literature, an instructive model is still needed. We present a novel and straightforward extension of the DiPasquale and Wheaton (DPW) model, with a price-rent (PR) ratio that incorporates the loan-to-value (LTV) ratio. In our modified DPW model, the LTV adjusted PR ratio allows for an explicit analysis of the opposing effects of lending gain and risk pricing on the user costs of housing. Moreover, the model highlights how changes in the mortgage market may contribute to booms and busts in the markets for both owner-occupied and rental housing.
Topics
No keywords indexed for this article. Browse by subject →
Metrics
2
Citations
0
References
Details
- Published
- Jun 30, 1998
- Vol/Issue
- 1(1)
- Pages
- 281-306
Authors
Cite This Article
Trond-Arne Borgersen, Anne Emblem (1998). Mortgage Market Induced Booms and Busts in the Housing Market in a Modified DiPasquale-Wheaton Model. International Real Estate Review, 1(1), 281-306. https://doi.org/10.53383/100344
Related