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Why has home ownership fallen among the young?

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  • Jonas D. M. Fisher
  • Martin Gervais

Abstract

We document that home ownership of households with "heads" aged 25 - 44 years fell substantially between 1980 and 2000 and recovered only partially during the 2001-2005 housing boom. The 1980-2000 decline in young home ownership occurred as improvements in mortgage opportunities made it easier to purchase a home. This paper uses an equilibrium life-cycle model calibrated to micro and macro evidence to understand why young home ownership fell over a period when it became easier to own a home. Our findings indicate that a trend toward marrying later and the increase in household earnings risk that occurred after 1980 account for 3/5 to 4/5 of the decline in young home ownership.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-09-01.

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Date of creation: 2009
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Handle: RePEc:fip:fedhwp:wp-09-01

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Keywords: Home ownership ; Marriage;

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Citations

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Cited by:
  1. Orazio Attanasio & Renata Bottazzi & Hamish Low & Lars Nesheim & Matthew Wakefield, 2012. "Modelling the Demand for Housing over the Lifecycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 1-18, January.
  2. Orhan Erem Atesagaoglu & Eva Carceles-Poveda & Alexis Anagnostopoulos, 2011. "Skill-Biased Technological Change and Homeownership," 2011 Meeting Papers 1183, Society for Economic Dynamics.
  3. Tomura, Hajime, 2013. "Heterogeneous beliefs and housing-market boom-bust cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 37(4), pages 735-755.
  4. Jonathan Halket & Michael Amior, 2012. "Do Households Use Homeownership To Insure Themselves? Evidence Across U.S. Cities," Economics Discussion Papers 718, University of Essex, Department of Economics.
  5. Jonathan Halket & Santhanagopalan Vasudev, 2012. "Home Ownership, Savings, and Mobility Over The Life Cycle," Economics Discussion Papers 712, University of Essex, Department of Economics.
  6. Alessandro Mennuni & Martin Gervais, 2010. "Optimal Fiscal Policy in the Neoclassical Growth Model Revisited," 2010 Meeting Papers 1093, Society for Economic Dynamics.
  7. Jonathan Halket & Santhanagopalan Vasudev, 2014. "Saving Up or Settling Down: Home Ownership over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 345-366, April.
  8. Agarwal, Sumit & Hu, Luojia & Huang, Xing, 2013. "Rushing into American Dream? House Prices, Timing of Homeownership, and Adjustment of Consumer Credit," Working Paper Series WP-2013-13, Federal Reserve Bank of Chicago.

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