Benjamin Smith

Benjamin Smith, Fernando Ferreira, Jeanna Kenney (Working), Household Mobility, Networks, and Gentrification of Minority Neighborhoods in the US.

Abstract: We study how recent gentrification shocks impact Black and Hispanic neighborhoods, including where minority households move to after a shock and if the subsequent spatial distribution of households within a labor market area affects segregation. We first report that household moves from a given neighborhood are concentrated to a few destinations. For minority neighborhoods, destinations tend to have similar minority shares but are farther away from downtown. Those mobility patterns are partially explained by neighborhood networks. We then use Bartik-style labor market income shocks to show that gentrification has many effects. In Black neighborhoods, gentrification increases house prices and reduces the share of Black households while increasing the share of White households. For movers from Black neighborhoods, gentrification increases the share of movers going to top 1 and 2 destinations based on neighborhood networks and increases the share of households moving out of the MSA, but does not change the pattern of households moving to neighborhoods with similar Black shares that are farther away from downtown areas. Hispanic neighborhoods have negligible effects from gentrification. Finally, our model reveals that overall labor market area segregation decreases after a gentrification shock because highly Black neighborhoods become less segregated.

Benjamin Smith, Morris Davis, Stephen Oliner, William Larson (2023), A Quarter Century of Mortgage Risk, Review of Finance.

Abstract: This article provides a comprehensive history of default risk for newly originated home mortgages in the USA over the past quarter century. The loan-level source data include the entire guarantee book for Fannie Mae and Freddie Mac. We track many loan characteristics and produce a summary measure of risk. Among our many results, we show that mortgage risk had already risen in the 1990s, planting seeds of the financial crisis well before the actual event. Our results also cast doubt on explanations of the crisis that focus on borrowers with low credit scores. The aggregate series are available for download at https://www.fhfa.gov/papers/wp1902.aspx.