Please provide a critique and literature review on "Real Estate Investors, the Leverage Cycle,and...

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Please provide a critique and literature review on "Real Estate Investors, the Leverage Cycle,and the Housing Market Crisis" byAndrew Haughwout et al in harvard referencing style and as well as a quantitative analysis on how the data were collected. I need a 1500 words for this report. Please provide plagarism report, thank you so much :) The dateline is super tight, please do not delay
	
Document Preview: Federal Reserve Bank of New York
Staff Reports
Real Estate Investors, the Leverage Cycle,
and the Housing Market Crisis
Andrew Haughwout
Donghoon Lee
Joseph Tracy
Wilbert van der Klaauw
Staff Report no. 514
September 2011
This paper presents preliminary findings and is being distributed to economists
and other interested readers solely to stimulate discussion and elicit comments.
The views expressed in this paper are those of the authors and are not necessarily
reflective of views at the Federal Reserve Bank of New York or the Federal
Reserve System. Any errors or omissions are the responsibility of the authors.Real Estate Investors, the Leverage Cycle, and the Housing Market Crisis 
Andrew Haughwout, Donghoon Lee, Joseph Tracy, and Wilbert van der Klaauw
Federal Reserve Bank of New York Staff Reports, no. 514
September 2011
JEL classification: G21, D18, R31
Abstract
We explore a mostly undocumented but important dimension of the housing market crisis:
the role played by real estate investors. Using unique credit-report data, we document
large increases in the share of purchases, and subsequently delinquencies, by real estate
investors. In states that experienced the largest housing booms and busts, at the peak of
the market almost half of purchase mortgage originations were associated with investors.
In part by apparently misreporting their intentions to occupy the property, investors took
on more leverage, contributing to higher rates of default. Our findings have important
implications for policies designed to address the consequences and recurrence of housing
market bubbles.
Key words: mortgages, leverage
Haughwout, Lee, Tracy, van der Klaauw: Federal Reserve Bank of New York (e-mail:
 XXXXXXXXXX,  XXXXXXXXXX,  XXXXXXXXXX,
 XXXXXXXXXX). The authors have benefited from helpful comments and
suggestions from participants at the April 2011 Housing Economics and Research Conference at the
University of...

Robert · Accepted Answer

The paper “Real Estate Investors, the Leverage Cycle, and the Housing Market Crisis,”studies the role 
of real estate investors or really speculators during the housing bubble. The authors use credit-report 
data, to capture information related to large increases in the share of purchases, and the subsequent 
delinquencies by the real estate investors. The literature discussion includes various reasons for rise in 
house prices in the period of early mid-2000s. These factors mentioned are: rise in income in housing 
market, lower costs of financing for houses, the Bush tax cuts enacted during this period which 
resulted in lowering of marginal tax rates. In addition, the literature discusses that there is an 
empirical connection between mortgage rates and house prices, but it is not strong enough to explain 
the dynamics of fluctuation of house prices during the housing boom.  
The paper suggests that interest rate and the required down payment are the two factors that reflect the 
constraints that may arise when a borrower wishes to bid on a property. Researchers found that real 
estate investors are to be blames for the inflation of home prices and the subsequent recession. It was 
they who took advantage of the low-down-payment and the subprime credit facility available at that 
time to purchase multiple residential properties.  They started defaulting on the loans and monthly 
payments when the home values started plummeting in 2006. It was seen that states such as in 
Arizona, Florida, California and Nevada were the worst hit in terms of delinquent mortgages between 
2007 and 2009 as they had the highest investor activity.
In 2006, approximately one-third of all home purchases were done by investors throughout the 
country. The four states had this number as high as 45%. In addition, there were more than 20% 
investors who had purchased more than three properties. Between 2007 and 2009, more than 33% of 
serious delinquent mortgages balances were because of these investors in the four states. This resulted 
in decline in the values of properties of millions of homeowners. They now stood at a value which 
was much less that their original purchase prices.

Please provide a critique and literature review on "Real Estate Investors, the Leverage Cycle,and the Housing Market Crisis" byAndrew Haughwout et al in harvard referencing style and as well as a...

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