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Wealth Accumulation and Housing Choices of Young Households: An Exploratory Investigation

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Author Info
Donald R. Haurin
Susan M. Wachter
Patric H. Hendershott

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Abstract

This paper describes the wealth accumulation of American youth and relates this behavior to their eventual housing choices. We develop a data set that links wealth profiles of youth with constant- quality house prices and tenure choice. A panel data set is compiled for youth age 20-33 for the years 1985 through 1990. We construct wealth profiles for each household over the six year period and indicate how wealth varies with labor supply, marriage, fertility, gender, education, race/ethnicity, and tenure choice. We find renters' wealth accumulates rapidly in the year before and year of first homeownership. The factors related to this increase are marriage, increased labor supply by married women, and gifts/inheritances. Of particular interest is the finding of an inverse U-shaped relationship between the local real price of housing and middle and upper income renters' wealth and married female labor supply. Also, youth in high housing cost localities tend to live in groups at a greater rate compared to those in low cost areas.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5070.

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Date of creation: Mar 1995
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Handle: RePEc:nbr:nberwo:5070

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Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
R20 - Urban, Rural, and Regional Economics - - Household Analysis - - - General

References listed on IDEAS
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  1. Engelhardt Gary V., 1994. "House Prices and the Decision to Save for Down Payments," Journal of Urban Economics, Elsevier, vol. 36(2), pages 209-237, September. [Downloadable!] (restricted)
  2. Blau, Francine D & Graham, John W, 1990. "Black-White Differences in Wealth and Asset Composition," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 321-39, May. [Downloadable!] (restricted)
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  3. William G. Gale & John Karl Scholz, 1991. "Intergenerational Transfers and the Accumulation of Wealth," UCLA Economics Working Papers 624, UCLA Department of Economics. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yongheng Deng & Stephen L. Ross & Susan M. Wachter, 2002. "Racial Differences in Homeownership: The Effect of Residential Location," Working papers 2002-05, University of Connecticut, Department of Economics. [Downloadable!]
    Other versions:
  2. Hud - Pd&R, 2005. "The Potential of Downpayment Assistance for Increasing Homeownership Among Minority and Low-Income Households," Economic Development Publications 39102, HUD USER, Economic Development. [Downloadable!]
  3. Carvalho, Kátia & Nascimento, Mabel & Neri, Marcelo Cortes, 2000. "Ciclo de Vida e Motivações Financeiras," Economics Working Papers (Ensaios Economicos da EPGE) 393, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  4. Gary Engelhardt, 2001. "Nominal Loss Aversion, Housing Equity Constraints, and Household Mobility: Evidence from the United States," Center for Policy Research Working Papers 42, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  5. François Ortalo-Magné & Sven Rady, 2005. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraint," Discussion Papers 50, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  6. Jonas D. M. Fisher & Martin Gervais, 2007. "First-time home buyers and residential investment volatility," Working Paper Series WP-07-15, Federal Reserve Bank of Chicago. [Downloadable!]
  7. Michael A. Stegman & Allison Freeman & Jong-Gyu Paik, 2007. "The portfolios and wealth of low-income homeowners and renters: findings from an evaluation of Self-Help Ventures Fund’s Community Advantage Program," Community Development Investment Center Working Paper 2007-02, Federal Reserve Bank of San Francisco. [Downloadable!]
  8. Renata Bottazzi, 2004. "Labour market participation and mortgage related borrowing constraints," IFS Working Papers W04/09, Institute for Fiscal Studies. [Downloadable!]
  9. Hud – Pd&R, 2005. "The Growth of Earnings of Low-Income Households and the Sensitivity of Their Homeownership Choices to Economic and Socio-Demographic Shocks," Economic Development Publications 39046, HUD USER, Economic Development. [Downloadable!]
  10. Ortalo-Magné, François & Rady, Sven, 2005. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints (Revised Version)," Discussion Papers in Economics 494, University of Munich, Department of Economics. [Downloadable!]
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