This dissertation addresses the potential mismeasurement of home price indices and its implications on mortgage default research during the recession and examines the potential drivers of the housing affordability issue since the recession. The first essay provides a rational reason why the distribution of home sellers is drastically different during economic downturns than during normal economic times. I show that when the economy enters into a recession, selection bias may affect observed home transaction prices. Since home price indices use these observed transaction prices, attempts to impute the value of every home in the housing stock is incorrect and will lead to inference issues. The second essay examines the entrance of institutional investors in the single-family housing market. I empirically test whether the entrance of institutional investors contributed to the subsequent increase in home prices after the recession. I find that institutional investors paid a discount of about 8.13%-11.19% per transaction. Additionally, I find that an increase in institutional investor home purchases in the single-family housing market had a positive statistical impact on individual home prices but only a moderate economic impact. The third essay investigates the impact of increased development fees in the residential housing market of York county, South Carolina. Using the increased development fees in the Fort Mill school district located within York county, I test for difference-in-differences in listing prices, closing price, and inventory after two separate increases in development fees. The evidence suggests that increased development fees correspond with a decrease in asking and closing prices and an increase in available inventory in the period immediately after the increase.
