Linkages Between Housing and Municipal Bond Markets

The housing recession has multiple flow-through effects, among them a potential for negatively impacting the financial condition of municipalities, and therefore, the municipal bond market. In this paper, Standard & Poor’s explores links between the housing and municipal bond markets at the county level. The data suggests an asymmetric relationship between home prices and municipal bond spreads, whereby the effect of home prices on municipal bond spreads is only prevalent in falling housing markets. Click here to read the concept paper.
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