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Does Investment Risk Affect the Housing Decisions of Families?

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  • Tracy M. Turner

Abstract

Households assume substantial house-price risk when purchasing a home. This article investigates the effect of such risk on families' housing decisions. Using a repeat cross-section of household data from the American Housing Survey spanning a 10-year period and measures of expected return and time-varying risk, I find that families are less likely to own and housing demand is reduced during episodes of relatively high, anticipated house-price volatility. The impact is greater on low- and moderate-income families and first-time homeowners than other groups. The results hold implications for policies designed to assist homeowners in lessening the risk they bear. (JEL R21, D12, D84) Copyright 2003, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/ei/cbg036
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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 41 (2003)
Issue (Month): 4 (October)
Pages: 675-691

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Handle: RePEc:oup:ecinqu:v:41:y:2003:i:4:p:675-691

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Cited by:
  1. Christian A. L. Hilber & Tracy M. Turner, 2013. "The mortgage interest deduction and its impact on homeownership decisions," LSE Research Online Documents on Economics 49843, London School of Economics and Political Science, LSE Library.
  2. Christian A. L. Hilber & Wouter Vermeulen, 2013. "The impact of supply constraints on house prices in England," Working Papers 2013/28, Institut d'Economia de Barcelona (IEB).
  3. Steven Sheffrin & Tracy Turner, 2001. "Taxation and House-Price Uncertainty: Some Empirical Estimates," International Tax and Public Finance, Springer, vol. 8(4), pages 621-636, August.
  4. McLeish, Kendra N. & Oxoby, Robert J., 2007. "Gender, Affect and Intertemporal Consistency: An Experimental Approach," IZA Discussion Papers 2663, Institute for the Study of Labor (IZA).
  5. Dusansky, Richard & Koc, Cagatay, 2007. "The capital gains effect in the demand for housing," Journal of Urban Economics, Elsevier, vol. 61(2), pages 287-298, March.
  6. Christian A.L. Hilber, 2003. "Neighborhood externality risk and the homeownership status of properties," Proceedings 885, Federal Reserve Bank of Chicago.
  7. Englund, Peter & Hwang, Min & Quigley, John M, 2002. "Hedging Housing Risk," The Journal of Real Estate Finance and Economics, Springer, vol. 24(1-2), pages 167-200, Jan.-Marc.
  8. Richard Dusansky & Çağatay Koç & Ilke Onur, 2012. "Household Housing Demand: Empirical Analysis and Theoretical Reconciliation," The Journal of Real Estate Finance and Economics, Springer, vol. 44(4), pages 429-445, May.
  9. Turner, Tracy M. & Luea, Heather, 2009. "Homeownership, wealth accumulation and income status," Journal of Housing Economics, Elsevier, vol. 18(2), pages 104-114, June.
  10. Hilber, Christian A. L. & Liu, Yingchun, 2007. "Explaining the Black-White Homeownership Gap: The Role of Own Wealth, Parental Externalities and Locational Preferences," MPRA Paper 5136, University Library of Munich, Germany.
  11. Sejeong Ha & Christian A. L. Hilber, 2013. "Do Long Distance Moves Discourage Homeownership? Evidence from England," SERC Discussion Papers 0141, Spatial Economics Research Centre, LSE.
  12. Jansson, Thomas, 2013. "Housing Choices and Labor Income Risk," Working Paper Series 272, Sveriges Riksbank (Central Bank of Sweden).

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