RDP 2023-01: The Effect of Credit Constraints on Housing Prices: (Further) Evidence from a Survey Experiment 3. The Survey Experiment

The stated preference survey experiment was appended to the US Survey of Consumer Expectations (SCE) run by the New York Federal Reserve Bank in 2014. This ensures both a representative sample and a rich set of financial data to add to the survey responses. The respondents were asked for their WTP for a home under four different conditions. Full details of the questions are available in Fuster and Zafar (2021),[3] and a summary is as follows.

  • The respondent is asked for an estimate of the value of the home they currently live in, among other questions about household characteristics.
  • Scenario setup: You are moving to a new city, and want to buy a house to live in for the indefinite future. You find a home you like; similar homes have been selling for <insert respondent's estimate of home value>. If the respondent owns their home, the scenario states that they sell it and discharge their mortgage.
  • Question: Suppose you need a down payment of 20%, and the mortgage rate is 6.5%. How much are you willing to pay for the home, bearing in mind you need to be able to make the down payment?
  • Repeat question for:
    • Minimum down payment of 5%,
    • Mortgage rate of 4.5%, and
    • Inheritance of US$100K.

Fuster and Zafar (2021) report that most respondents spent some time using the provided repayment calculator to assist with the decision. The main results in Fuster and Zafar use the unweighted SCE sample, although they show that using the sample weights makes little difference. For comparability with the main results I do not use weights.


See the online appendix, available at <https://doi.org/10.1257/pol.20150337>. [3]