In a new project, Breaking the Lock-In Effect: How Assumable Mortgages Shape Housing Prices and Supply Dynamics, Jiayi Zheng (MQ), Min Zhu (UQ) and I study the impact of assumption financing on housing prices and supply.
Under submission
Presentations: FMA, SFA, NZ Finance Meeting, FIRN Banking and Financial Stability conference, AsianFA, ABFER, Brownbags at ANU, UQ and QUT
The post-Covid surge in mortgage rates has sparked interest in assumable mortgages and their impact on the housing market. Using novel listing and transaction data from 14 US regions, we show that as- sumability increases property values, with each additional dollar of assumption value raising sale prices by around thirty cents, influenced by seller bargaining power, local demographics and rental expenses. The assumption feature also accelerates sales by nearly a week. While high interest rates create a lock-in effect, our analysis demonstrates that assumable mortgages mitigate this impact, improving both housing supply and household mobility.
"The Impact of Introducing a (Nearly) Redundant Security: Evidence from Malaysian Corporate Bonds"
with Jean Helwege (UC Riverside), Amanda Liu (Independent) and Frank Packer (BIS)
R&R Journal of Financial Economics
Presentations at ABFER (scheduled), BIS, Yeshiva University, FMA, ANU Research Camp
with Nhan Le (ANU) and Justin Nguyen (ECU)
Under submission
Nhan Le (ANU), Justin Nguyen (ECU) and I have a new paper titled "A Redistribution Effect between Employee Health Benefits and CEO Compensation: Evidence from Paid Sick Leave Mandates" We investigate the effect of Paid Sick Leave (PSL) mandates on CEO compensation. We find a significant reduction in CEO pay following state-level PSL mandates, particularly in states with higher maximum PSL hours, competitive industries, and firms with low profit margins, high labor intensity, and elevated health risks. Additionally, we observe increased firm value and improved income for low-wage workers post-PSL mandates. Given that the U.S. is the only industrialized nation without a national paid sick leave policy, our findings offer valuable insights for regulatory reforms that can balance between employee welfare, CEO pay, and corporate performance.