UC Berkeley

This dissertation studies accessibility to housing along the housing cycle, understanding the inequitable returns to housing by race, and household expectations of the housing market. The first chapter investigates the mortgage channel of monetary policy transmission to home purchasing behaviors of first-time home buyers and incumbent homeowners. Between 2009 and 2019, the first-time home buyer share of home purchases fell from 35% to 22%, a period in which mortgage rates fell from nearly 7% to 3.5%. First, I construct a new mortgage rate-specific monetary policy shock to use as an IV for mortgage rate changes which predicts future mortgage rates better than existing monetary policy shocks. Next, I provide empirical evidence for three new findings: 1) transacted house prices respond to monetary policy-induced mortgage rate changes within a matter of weeks, indicating a rapid housing demand response to mortgage rates; 2) a negative 25 basis point mortgage rate shock lowers the first-time buyer share of home purchases by 77 b.p. in the first three months after the shock; 3) these results are more pronounced among lower-income households and in areas with higher shares of high LTV-constrained borrowers which tend to be areas with more severe housing crises. Finally, I construct a lifecycle model with a housing ladder, heterogeneous agents, and a system of housing-related taxes calibrated to my empirical findings. I find that a one-time unanticipated negative one p.p. transitory shock to mortgage rates causes potential first-time home buyers to face 0.1% consumption-equivalent welfare losses while incumbent homeowners receive welfare-gains of 0.19%. The second chapter investigates the financial disparities Black sellers face in the US housing market. Using repeat-sale transactions from 2003 to 2020, we document that Black sellers earn, on average, 0.36% lower annualized unlevered returns on their property sales compared to non-Black sellers. These racial disparities in housing returns are not explained by seller characteristics, property renovations, the buyer's race, seller agent fixed effects, and appraisal measures. However, we find significant racial gaps in listing prices and time on market, which we attribute to intermediaries involved in housing transactions. Controlling for these factors reduces the racial gap in returns to effectively zero. Additionally, we construct a measure of a neighborhood's exposure to buyer agent discriminatory practices using the HUD Discrimination Survey, and find that the racial gap dissipates for homes less exposed to discriminatory practices. Finally, we find that when homes are sold to iBuyers, where human intermediary bias is removed, the racial gap in housing returns disappears. Our findings suggest that Black sellers experience worse selling outcomes due to higher search frictions caused by human intermediary practices. The third chapter studies how household expectations shape housing supply and prices. Using survey data on mortgage rate and house price expectations, I document new facts about expectation formation and relate these beliefs to realized housing outcomes. First, I find that homeowners' one-year mortgage rate expectations are state and path-dependent. Second, while house price expectations are typically negatively related to mortgage rates, this relationship reverses in high-rate environments: in low-supply-elasticity states, homeowners who expect rates to fall also expect house prices to rise. Third, I show that homeowners update their house price expectations in response to a mortgage rate shock, demonstrating that homeowners internalize existing information and quickly update their own expectations. I find that annualized metropolitan delistings growth is related to high mortgage rate levels, high shares of homeowners expecting mortgage rate increases, and high shares of households expecting house price decreases. Although delistings are associated with falling house prices, during high periods of mortgage rates, I find that delistings cause prices to rise. The mechanism is simple: rising delistings reduce the effective housing supply which pushes up prices. These results provide new, direct empirical evidence on the positive co-movement of house prices and mortgage rates in 2022--2025.