Housing Equity Dynamics and Home Improvements

42 Pages Posted: 27 Apr 2017 Last revised: 31 Jan 2022

See all articles by Xun Bian

Xun Bian

University of North Texas

Date Written: April 15, 2017

Abstract

In this study, we examine the effect of housing equity position, measured using the loan-to-value (LTV) ratio, on the probability of home improvements. Using 2001-2011 data from the Panel Study of Income Dynamics (PSID), we find that a higher LTV ratio, in general, reduces the probability of home improvements. We also find that the probability of home improvements depends on the recent change of housing equity position and, more importantly, on the causes of the change. Probability of home improvements decreases more when a high LTV ratio is caused by falling house prices than when it is caused by equity extraction.

Keywords: Loan-To-Value Ratio, Home Improvements, Housing Equity

JEL Classification: D14, R31

Suggested Citation

Bian, Xun, Housing Equity Dynamics and Home Improvements (April 15, 2017). Journal of Housing Economics, Vol. 37, 2017, Available at SSRN: https://ssrn.com/abstract=2959158 or http://dx.doi.org/10.2139/ssrn.2959158

Xun Bian (Contact Author)

University of North Texas ( email )

G. Brint Ryan College of Business
1155 Union Circle #311160
Denton, TX 76203
United States
(940) 369-8309 (Phone)

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