"We looked at the areas where house prices grew and the areas where the number of subprime mortgages grew," Conklin said. "There's no doubt that people with lower credit scores defaulted more but they weren't driving up prices."Ĭonklin's team looked county by county at the percentage of loans issued to borrowers with credit scores under 660 across the U.S. "Our take is that the people with the low credit scores don't seem to be driving the housing boom," Conklin said. Housing Boom." The paper appeared in the July 2022 edition of the Journal of Financial Intermediation. Scott Frame, Kristopher Gerardi and Haoyang Liu published their findings in "Villains or scapegoats? The role of subprime borrowers in driving the U.S. That doesn't seem to be the case."Ĭonklin and his coauthors, Federal Reserve Bank economists W. "Then there was an inflow of easy credit and it allowed those people to push prices up to unsustainable levels. "I think a lot of people have the scenario in their head that there was this big pool of people with low credit scores who couldn't buy before this time," Conklin said. Subprime loans are loans given to borrowers who may have difficulty with repayment due to low credit scores and income. James Conklin, an associate professor of real estate at UGA's Terry College of Business, wanted to test a common perception about the crisis-that the prevalence of subprime loans led to unwarranted and unsustainable housing values. With housing prices at new record highs, researchers at the University of Georgia are still debunking common misconceptions about the 2008 boom and bust.
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