The Flow of Funds Through Residential Real Estate Markets

Andreas Rauterkus, Stephanie Yates

Abstract


This paper intends to use flow of funds analysis to see if bubbles and crashes in the residential mortgage market could have been predicted by examining the flow of funds through key institutions such as Fannie Mae and Freddie Mac.  Conducting a simple event study we find that increased flow of funds does not have an impact on housing prices. However, any decrease in the flow of funds leads to a significant downward market correction. This indicates that government sponsored entities such as Freddie Mac or Fannie Mae have the ability to cool down an overheated housing market.


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References


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Copyright (c) 2020 Andreas Rauterkus

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This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.