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Why has home ownership fallen among the young?

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  • Gervais, Martin
  • Fisher, Jonas

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 Keywords; housing, home ownership, tenure choice, first-time home-buyers, marriage, income risk

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Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 0907.

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Date of creation: 01 Jan 2009
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Handle: RePEc:stn:sotoec:0907

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Cited by:
  1. Alessandro Mennuni & Martin Gervais, 2010. "Optimal Fiscal Policy in the Neoclassical Growth Model Revisited," 2010 Meeting Papers, Society for Economic Dynamics 1093, Society for Economic Dynamics.
  2. 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.
  3. Silvio Rendon & Nuria Quella, 2013. "Behind the Great Recession: Job Search and Housing Decisions," Department of Economics Working Papers, Stony Brook University, Department of Economics 13-03, Stony Brook University, Department of Economics.
  4. Morris A. Davis & Stijn Van Nieuwerburgh, 2014. "Housing, Finance and the Macroeconomy," NBER Working Papers 20287, National Bureau of Economic Research, Inc.
  5. Jonathan Halket & Santhanagopalan Vasudev, 2012. "Home Ownership, Savings, and Mobility Over The Life Cycle," Economics Discussion Papers, University of Essex, Department of Economics 712, University of Essex, Department of Economics.
  6. 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.
  7. Alexis Anagnostopoulos & Orhan Erem Atesagaoglu & Eva Carceles-Poveda, 2012. "Skill-Biased Technological Change and Homeownership," Department of Economics Working Papers, Stony Brook University, Department of Economics 12-09, Stony Brook University, Department of Economics.
  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, Federal Reserve Bank of Chicago WP-2013-13, Federal Reserve Bank of Chicago.
  9. Tomura, Hajime, 2013. "Heterogeneous beliefs and housing-market boom-bust cycles," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 37(4), pages 735-755.
  10. Jonathan Halket & Michael Amior, 2012. "Do Households Use Homeownership To Insure Themselves? Evidence Across U.S. Cities," Economics Discussion Papers, University of Essex, Department of Economics 718, University of Essex, Department of Economics.
  11. Roine Vestman, 2013. "Limited Stock Market Participation Among Renters and Home Owners," 2013 Meeting Papers, Society for Economic Dynamics 549, Society for Economic Dynamics.

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