Essays on Government Policy in Real Estate Markets

This dissertation uses administrative data to study regulatory issues in the American real estate market. The first chapter studies spillovers from home foreclosures in Cook County, Illinois. Random assignment of foreclosure cases to judges allows for estimation of the causal effect of foreclosure (relative to a foreclosure case being dismissed) on neighboring foreclosure filings and housing transactions. When a property forecloses, the local housing market is disrupted--prices fall and more lower quality homes sell--and neighbors are more likely to end up in default and going through the foreclosure process. The second chapter examines how discontinuously applied transfer taxes distort the mar- ket for real estate sales in New York and New Jersey. These transfer taxes distort not only the price of real estate transactions that occur near the discontinuity, corresponding to sellers bearing the entire incidence of the tax, but also the volume of sales that occur--productive transactions that would occur if the tax were not discontinuous disappear from the market. The third and final chapter estimates the market-level response of home equity loans to two discontinuous mortgage policies--the home mortgage interest deduction, and real estate appraisal regulations in the Financial Institutions Reform Recovery and Enforcement Act. The estimates therein imply that home equity debt is very responsive to both the after-tax interest rate as well as lender underwriting requirements.