Sources and Uses of Equity Extracted from Homes

By A. Greenspan, James E. Kennedy. 2007

304 citations recorded by the source corpus.

In this paper, we present estimates of the disposition of the free cash generated by home equity extraction to finance consumer spending, outlays for home improvements, debt repayment, acquisition of assets, and other uses. We estimate free cash as cash available net of closing costs and repayment of other mortgage debt. We also have extended the quarterly data series for gross equity extraction, presented in our earlier paper, back to 1968.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/1df9b6e20d65639822408616b2cd1c058230bf69

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Citations in the corpus

A Model of the Consumption Response to Fiscal Stimulus Payments (2011, background): “According to Greenspan and Kennedy (2008), 2/3 of the net proceeds of home equity loans are used for home improvements and purchase of durables.”
The Origins of the Financial Crisis (2011, background): “Greenspan and Kennedy (2007) estimate that homeowners extracted $743.7 billion in net equity from their homes at the peak of the housing boom in 2005 — up from $229.6 in 2000 and $74.2 in 1991.”
Has Consumption Inequality Mirrored Income Inequality (2015, background): “This high rate is not supported by other studies of refinancing, which suggest that roughly 13 percent of the new mortgage is taken out as cash and the remainder is used to pay off existing mortgages and related costs (see Greenspan and Kennedy, 2007).”
Housing and Liquidity (2015, background): “In related work, Greenspan and Kennedy (2007) find that home equity withdrawal financed about 3% of personal consumption from 2001 to 2005, and Disney and Gathergood (2011) find one-fifth of the recent growth in household indebtedness can be explained by rising house prices.”
Addressing Household Indebtedness: Monetary, Fiscal or Macroprudential Policy? (2017, unknown): “therefore given by nI,t (i) = ( WI,t (i) WI,t )−ηn,t nI,t, (24)”
The Financial and Economic Crisis of 2008: A Systemic Crisis of Neoliberal Capitalism (2009, methodology): “Gross Equity Extracted as a Percentage of Disposable Personal Income Source: Updated data from Greenspan and Kennedy (2007). The updated data are from the Federal Reserve, obtained by Steven Fazzari.”
House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis (2011, unknown): “…to studies that estimate the effect of house price growth on consumption, refinancing, and borrowing behavior (Case, Quigley, and Shiller (2005), Bostic, Gabriel, and Painter (2009), Haurin and Rosenthal (2006) Hurst and Stafford (2004), Campbell and Cocco (2007), Greenspan and Kennedy (2007)).”
Liquidity and asset-market dynamics (2010, unknown): “yt = min y ; ! 1 [(qt + )A] ; (27) nt = 1 min k (1 ) [u (yt) c (yt)] ; 1 ; (28)”