IFin Seminar, Nicola Pavanini, Tilburg University "Leverage Regulation and Housing Inequality"

Speaker: IFin Seminar, Nicola Pavanini, Tilburg University 

Title:      Leverage Regulation and Housing Inequality

Date:      April 10, 2025

Ore:        12:25 - 13:40

Room:     Red Room - Executive Center

Lugano West Campus

Abstract

We estimate an equilibrium model of housing demand and supply, quantifying the distributional effects of leverage regulation on household mobility, access to high-quality housing, debt and house prices. We match the population of households in Norway in 2010-2018, with demographic and financial characteristics, to the universe of housing transactions. Our model features households' dynamic renting and owning choices, investors' housing portfolio rebalancing, and equilibrium pricing. We recover households' willingness to pay for housing quality and moving costs. Our counterfactuals quantify costs and benefits of loan-to-income (LTI) limits. While tighter limits reduce household debt and house prices, they also have regressive effects on mobility. We document how these effects depend household preferences and financial constraints, and can be offset with housing subsidies.