Conference Agenda

We examine how congressional representation affects local housing markets through its influence on housing finance. Using the near-universe of U.S. housing transactions from 1990 to 2020 linked to congressional districts, we exploit the staggered entry and exit of representatives from the House Financial Services Committee (FSC) as plausibly exogenous shocks to their influence over housing and mortgage policy. A border design comparing properties within five kilometers of adjacent districts holds local economic conditions constant. House prices increase by about 4 percent when a district’s representative joins the FSC and decline by a similar amount when the representative leaves. These effects coincide with higher mortgage origination, greater government-sponsored enterprise (GSE) purchases, and higher conforming loan limits, but no change in construction activity or allocations of Low-Income Housing Tax Credit programs. Representation on the FSC affects local housing markets primarily through credit supply, leading to localized changes in property values.

We study the impact of the Federal Reserve's pandemic-era Mortgage-Backed Security purchases (QE4) on housing markets and consumer inflation. Using mortgage market segmentation, we generate a cross-sectional interest rate instrument to capture areas more heavily affected by Fed purchases in the conforming mortgage market. We find QE4 substantially decreased mortgage rates, raised house prices and rents, and lowered local unemployment. We interpret these results through a quantitative spatial model, and estimate substantial impacts of mortgage purchases on aggregate house prices and consumer inflation. Our findings suggest that unconventional monetary policy can meaningfully stimulate housing demand and economic activity, but may also amplify inflationary pressures and housing affordability tradeoffs.

We examine how easing mortgage borrowing constraints affects entry into homeownership. Using administrative mortgage data and cross-district exposure to the UK Help-to-Buy program, which re-opened the 95% LTV segment in 2013, we show that first-time buyer purchases rose sharply in more exposed areas. Introducing a new proxy for financial support—based on the gap between observed and predicted down payments—we find that gains were concentrated among households unlikely to have relied on transfers, suggesting a weaker role for family wealth in enabling homeownership. Because these buyers tend to have higher incomes, the composition of homeowners shifted toward higher-income households.