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Saving Up or Settling Down: Home Ownership over the Life Cycle

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  • Jonathan Halket

    (University of Essex)

  • Santhanagopalan Vasudev

    (University of Essex)

Abstract

In a Bewley model with endogenous price volatility, home ownership and mobility across locations and jobs, we assess the contribution of financial constraints, housing illiquidities and house price risk to home ownership over the life cycle. The model can explain the rise in home ownership and fall in mobility over the life cycle. While some households rent due to borrowing constraints in the mortgage market, factors that affect propensities to save and move, such as risky house values and transactions costs, are equally important determinants of the ownership rate. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2013.06.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 17 (2014)
Issue (Month): 2 (April)
Pages: 345-366

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Handle: RePEc:red:issued:12-89

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Keywords: Home ownership; Incomplete markets; Illiquid assets; Financial constraints;

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Cited by:
  1. Morris A. Davis & Stijn Van Nieuwerburgh, 2014. "Housing, Finance and the Macroeconomy," NBER Working Papers 20287, National Bureau of Economic Research, Inc.

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