Research

We often hear that “people don’t know their neighbors anymore” or that “neighborhoods don’t matter,” but our research challenges this assumption. Using detailed parcel-level and household-level data sets, we show that households are affected by their neighbors in a number of ways, positive and negative. As those who share our immediate built and natural environment, our neighbors are key players in our social networks. Understanding how they affect us, how we affect them, and how policy can leverage these relationships is a key research initiative of the HUFL.

The mortgage industry is an intricate web of home buyers, underwriters, lenders, and governments. A complex and dynamic set of policies, regulations, cutoffs, and requirements dictate the rules. And a creative financial market has developed many products ultimately depending on mortgage payments. HUFL researchers work to better understand the multi-trillion dollar mortgage market.

Measuring and understanding the extent to which individuals and households are exposed to environmental change and its consequences is critical to increasing the resilience and sustainability of the United States. While technological advances have improved our understanding of where environmental changes and events are happening across space and time, there remain large gaps in our understanding of who is exposed and the consequences of exposure. The HUFL works closely with The Environmental Inequality Lab to better understand how we can reduce disparities in environmental quality.

In democracies, the policymakers who write legislation and implement public policy are not randomly assigned, they are elected. But how households’ financial situations affect who the policymakers are and the decisions they make is poorly understood. And the importance of political affiliation and partisanship in today’s society means that being civically engaged is no longer just about driving policy changes but also expressing ones self-identity. HUFL’s extraordinarily detailed data allows us to better understand the ramifications of a polarized electorate for both households and urban environments.

Patrick Bayer, Marcus Casey, W. Ben McCartney, John Orellana-Li, Calvin Zhang

Abstract: We study neighborhood choice using a novel research design that contrasts the move rate of homeowners who receive a new different-race neighbor immediately next-door versus slightly farther away on the same block. This approach isolates a component of preferences directly attributable to neighbors' identities. Both Black and White homeowners are more likely to move after receiving a new different-race neighbor. Findings are robust to additional controls (e.g., income) and alternative research designs. We find evidence of heterogeneity in responses, especially associated with housing density, which has implications for understanding contemporary neighborhood racial change and prospects for maintaining stable, integrated neighborhoods.

Sanket Korgaonkar

Abstract: This paper documents the agency costs resulting from the deeper tranching of subprime residential mortgage pools. Mortgage servicers are less likely to renegotiate delinquent loans collateralizing a greater number and variety of tranches. We find that an interquartile increase in tranching reduces mortgage servicers’ probability of loan renegotiation by 14% relative to the mean. This effect is concentrated in mortgages with greater ambiguity surrounding the loan value maximizing action. Overall, our results support the notion that tranching worsens agency frictions by increasing coordination costs among investors and impeding their monitoring of the agent.