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Real Estate and Housing Finance

Paper Session

Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)

Loews Philadelphia Hotel
Hosted By: American Finance Association
  • Gonzalo Maturana, Emory University

Coverage Neglect in Homeowners Insurance

Anthony J. Cookson
,
University of Colorado-Boulder
Emily Gallagher
,
University of Colorado-Boulder
Philip Mulder
,
University of Wisconsin-Madison

Abstract

Most homeowners do not have enough insurance coverage to rebuild their house after a total loss. Using contract-level data from 24 homeowners insurance companies in Colorado, we show wide differences in average underinsurance across insurers that persist conditional on policyholder characteristics. Underinsurance matters for disaster recovery. Across households that lost homes to a major wildfire, each 10 p.p. increase in underinsurance reduces the likelihood of filing a rebuilding permit within a year by 4 p.p.. To understand why consumers purchase underinsured policies, we build a discrete choice insurance demand model. The results suggest that policyholders treat insurers that write less coverage as if they set lower premiums, forgoing options to get more coverage at the same premium from other insurers – a pattern we call coverage neglect. Our findings suggest that coverage limits are either not salient to consumers or difficult to estimate without the input of insurance agents. Under a counterfactual without coverage neglect, consumer surplus increases by $290 per year, or 10% of annual premiums, on average.

Who Should Manage Impact Investments? Evidence from Affordable Housing

Jess Cornaggia
,
Pennsylvania State University
Christophe Spaenjers
,
University of Colorado-Boulder
Eva Steiner
,
Pennsylvania State University

Abstract

We study asset-level investments by non-profit and for-profit investors in the U.S. housing market over the past two decades. We show that non-profits favor affordable properties and less affluent neighborhoods, consistent with a focus on social impact investments. When comparing similar investments, we find that non-profit investors earn lower capital gains than do for-profit investors. These results cannot be fully explained by non-profit investors’ preferences for social impact investments or for impact-oriented asset management choices. Our evidence is more consistent with non-profit investors bargaining less. These results suggest that impact-driven investors may leave money on the table.

Determinants and Consequences of Return to Office Policies

Sean Flynn
,
Cornell University
Andra Ghent
,
University of Utah
Vasudha Nair
,
University of Utah

Abstract

"We study the return to office (RTO) policies of publicly-traded firms by hand collecting and classifying announcements for the Russell 3000 firms. Most firms allow some remote work but few allow fully remote work. We then examine RTO policy choice in a model where firms trade off in-person productivity benefits with an in-person wage premium. Consistent with the model’s predictions, office rents in the firm’s headquarters city determine RTO policy. We also find that larger
firms choose more stringent policies and firms with female CEOs choose laxer policies. Finally, we find no significant stock market reaction to policy announcements."

Screen More, Sell Later: Screening and Dynamic Signaling in the Mortgage Market

Manuel Adelino
,
Duke University; NBER and CEPR
Bin Wei
,
Federal Reserve Bank of Atlanta
Feng Zhao
,
University of Texas at Dallas

Abstract

In dynamic models of asset markets with asymmetric information and endogenous screening, the
anticipation of signaling through delayed sales incentivizes originators to exert greater effort ex
ante. A central prediction in those models is a positive relationship between screening effort and
the delay of sale. We test this theoretical prediction using the mortgage market as a laboratory,
with processing time serving as a measure of screening effort. In line with the theory, mortgage
processing time and the delay of sale after origination are strongly positively related in the data.
Both processing time and delay of sale are negatively related to conditional mortgage default,
even though mortgages with higher ex ante credit risk are processed slower. This highlights
the contrast between observable and unobservable risk, and indicates that more screening effort
leads to unobservably higher quality loans that are also sold with a longer delay.

Discussant(s)
Parinitha Sastry
,
University of Pennsylvania
Samuel Hartzmark
,
Boston College
Kyle Mangum
,
Federal Reserve Bank of Philadelphia
Taylor Begley
,
University of Kentucky
JEL Classifications
  • G0 - General