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Expected Home Ownership and Real Wealth Accumulation of Youth

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  • Donald R. Haurin
  • Patric H. Hendershott
  • Susan M. Wachter

Abstract

This paper describes the real wealth accumulation of American youth and relates this behavior to variations in real constant-quality house prices in their localities of residence. We argue that increases in the real constant-quality house price have two offsetting effects on wealth. First, the greater the local constant-quality price of housing, the greater the wealth needed to meet the lender imposed down payment constraint if housing demand is price inelastic. However, increased real constant-quality house price reduces the likelihood of home ownership and thus the desire the accumulate wealth needed for a down payment. Using a panel data set for youth age 20-33 for the years 1985 through 1990 we find that the combined direct and indirect impact of variations in real constant-quality house price on wealth is modest for changes near the average real house price, but youths' wealth declines substantially in areas with high real house price.

Suggested Citation

  • Donald R. Haurin & Patric H. Hendershott & Susan M. Wachter, 1996. "Expected Home Ownership and Real Wealth Accumulation of Youth," NBER Working Papers 5629, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5629
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    References listed on IDEAS

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    1. 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, March.
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    1. Hochgürtel, S. & van Soest, A.H.O., 1996. "The Relation Between Financial and Housing Wealth of Dutch Households," Discussion Paper 1996-82, Tilburg University, Center for Economic Research.
    2. Michael Berlemann & Julia Freese, 2013. "Monetary policy and real estate prices: a disaggregated analysis for Switzerland," International Economics and Economic Policy, Springer, vol. 10(4), pages 469-490, December.
    3. Carter, Steven, 2011. "Housing tenure choice and the dual income household," Journal of Housing Economics, Elsevier, vol. 20(3), pages 159-170, September.
    4. Hochguertel, Stefan & van Soest, Arthur, 2001. "The Relation between Financial and Housing Wealth: Evidence from Dutch Households," Journal of Urban Economics, Elsevier, vol. 49(2), pages 374-403, March.
    5. Andrew, Mark & Haurin, Donald & Munasib, Abdul, 2006. "Explaining the route to owner-occupation: A transatlantic comparison," Journal of Housing Economics, Elsevier, vol. 15(3), pages 189-216, September.
    6. Jeffry Jacob & Abdul Munasib, 2009. "Housing Tenure Choice Implications of Social Networks," Economics Working Paper Series 0901, Oklahoma State University, Department of Economics and Legal Studies in Business, revised 2009.
    7. Chirkova, Elena (Чиркова, Елена) & Valieva, Dinara (Валиева, Динара) & Menshikov, Yuri (Меньшиков, Юрий) & Nosova, Alexandra (Носова, Александра), 2017. "Debt Restructuring of the Russian Metallurgical Companies Caused by the Crisis of 2008 [Реструктуризации Долга Российскими Металлургическими Компаниями В Кризис 2008 Года]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 174-209, June.
    8. Drobyshevsky Sergey & Trunin Pavel & Knobel Alexandr, 2006. "Some Approaches to the Development of the System of Indicators for Monitoring the Financial Stability," Research Paper Series, Gaidar Institute for Economic Policy, issue 103P.
    9. Clara H. Mulder & William A.V. Clark & Michael Wagner, 2002. "A comparative analysis of leaving home in the United States, the Netherlands and West Germany," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 7(17), pages 565-592.
    10. Abdul Munasib, 2009. "Housing Tenure Choice Implications of Social Networks: A Structural Model Approach," Economics Working Paper Series 0905, Oklahoma State University, Department of Economics and Legal Studies in Business.
    11. Juan Mora-Sanguinetti, 2012. "Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(3), pages 339-365, September.

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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