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Should the stagnant homeownership rate be a source of concern?

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  • Green, Richard K.

Abstract

The homeownership rate in the United States was essentially stagnant during the 1980's. This stagnation should be a source of concern if the rate reflects stagnant economic conditions and ownership opportunities, not if it simply reflects changing demographic conditions or preferences. Using a series of affordability measures, we find that homeownership opportunities improved almost everywhere during the 1980's, suggesting that the cause of the stagnant rate was something other than economic conditions. In fact, we find that both demographics and changes in preferences led to an increase in the proportion of households headed by single people; all else being equal, this would tend to push the owner-occupancy rate downward. We also found that while homeownership opportunities improved during the 1980's, the ex ante use cost of owning a home increased almost everywhere, reducing the financial attractiveness of owning a home. The combination of improving affordability conditions and worsening financial appeal had an overall neutral effect on the aggregate ownership rate.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 26 (1996)
Issue (Month): 3-4 (June)
Pages: 337-368

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Handle: RePEc:eee:regeco:v:26:y:1996:i:3-4:p:337-368

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References

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  1. Richard K. Green & Michelle J. White, 1994. "Measuring the Benefits of Homeowning: Effects on Children," Wisconsin-Madison CULER working papers 94-05, University of Wisconsin Center for Urban Land Economic Research.
  2. Goodman, John Jr. & Ittner, John B., 1992. "The accuracy of home owners' estimates of house value," Journal of Housing Economics, Elsevier, vol. 2(4), pages 339-357, December.
  3. Patric H. Hendershott & Joel Slemrod, 1982. "Taxes and the User Cost of Capital for Owner-Occupied Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 10(4), pages 375-393.
  4. Peter Linneman & Susan Wachter, 1989. "The Impacts of Borrowing Constraints on Homeownership," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(4), pages 389-402.
  5. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, November.
  6. Donald R. Haurin & Susan M. Wachter & Patric H. Hendershott, 1995. "Wealth Accumulation and Housing Choices of Young Households: An Exploratory Investigation," NBER Working Papers 5070, National Bureau of Economic Research, Inc.
  7. Peter M. Zorn, 1989. "Mobility-Tenure Decisions and Financial Credit: Do Mortgage Qualification Requirements Constrain Homeownership?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(1), pages 1-16.
  8. Case, Karl E & Shiller, Robert J, 1989. "The Efficiency of the Market for Single-Family Homes," American Economic Review, American Economic Association, vol. 79(1), pages 125-37, March.
  9. Goodman, Allen C., 1988. "An econometric model of housing price, permanent income, tenure choice, and housing demand," Journal of Urban Economics, Elsevier, vol. 23(3), pages 327-353, May.
  10. Mallar, Charles D, 1977. "The Estimation of Simultaneous Probability Models," Econometrica, Econometric Society, vol. 45(7), pages 1717-22, October.
  11. Follain, James R. & Ling, David C., 1991. "The Federal Tax Subsidy to Housing and the Reduced Value of the Mortgage Interest Deduction," National Tax Journal, National Tax Association, vol. 44(2), pages 147-68, June Cita.
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Citations

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Cited by:
  1. Coulson, N. Edward & Dalton, Maurice, 2010. "Temporal and ethnic decompositions of homeownership rates: Synthetic cohorts across five censuses," Journal of Housing Economics, Elsevier, vol. 19(3), pages 155-166, September.
  2. Lewis M. Segal & Daniel G. Sullivan, 1998. "Trends in homeownership: race, demographics, and income," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 53-72.
  3. Engelhardt, Gary V., 2008. "Social security and elderly homeownership," Journal of Urban Economics, Elsevier, vol. 63(1), pages 280-305, January.
  4. Christopher J. Mayer & Gary V. Engelhardt, 1994. "Gifts, down payments, and housing affordability," Working Papers 94-5, Federal Reserve Bank of Boston.
  5. Serena Trucchi, 2011. "How credit markets affect homeownership: an explanation based on differences between Italian regions," CeRP Working Papers 122, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  6. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2007. "Accounting for changes in the homeownership rate," Working Paper 2007-21, Federal Reserve Bank of Atlanta.
  7. Rodriguez, J. & Barrios, J., 2004. "Politica fiscal de vivienda en EspaƱa y forma de tenencia de la vivienda habitual: una valoracion empirica a nivel provincial," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 4(2).
  8. Ron Feldman, 2002. "Mortgage rates, homeownership rates, and government-sponsored enterprises," Annual Report, Federal Reserve Bank of Minneapolis, pages 4-23.
  9. Ortalo-Magne, Francois & Rady, Sven, 2002. "Tenure choice and the riskiness of non-housing consumption," Journal of Housing Economics, Elsevier, vol. 11(3), pages 266-279, September.
  10. Marshall, Maria I. & Marsh, Thomas L., 2007. "Consumer and investment demand for manufactured housing units," Journal of Housing Economics, Elsevier, vol. 16(1), pages 59-71, March.
  11. Juan Mora-Sanguinetti, 2012. "Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level," SERIEs, Spanish Economic Association, vol. 3(3), pages 339-365, September.
  12. Green, Richard K. & Vandell, Kerry D., 1999. "Giving households credit: How changes in the U.S. tax code could promote homeownership," Regional Science and Urban Economics, Elsevier, vol. 29(4), pages 419-444, July.

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