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Does Investment Risk Affect the Housing Decisions of Families?


  • Tracy M. Turner


Households assume substantial house-price risk when purchasing a home. This article investigates the effect of such risk on families' housing decisions. Using a repeat cross-section of household data from the American Housing Survey spanning a 10-year period and measures of expected return and time-varying risk, I find that families are less likely to own and housing demand is reduced during episodes of relatively high, anticipated house-price volatility. The impact is greater on low- and moderate-income families and first-time homeowners than other groups. The results hold implications for policies designed to assist homeowners in lessening the risk they bear. (JEL R21, D12, D84) Copyright 2003, Oxford University Press.

Suggested Citation

  • Tracy M. Turner, 2003. "Does Investment Risk Affect the Housing Decisions of Families?," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 675-691, October.
  • Handle: RePEc:oup:ecinqu:v:41:y:2003:i:4:p:675-691

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    References listed on IDEAS

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    Cited by:

    1. Tracy M. Turner & Daigyo Seo, 2007. "Investment Risk And The Transition Into Homeownership," Journal of Regional Science, Wiley Blackwell, vol. 47(2), pages 229-253.
    2. Christian A. L. Hilber & Tracy M. Turner, 2014. "The Mortgage Interest Deduction and its Impact on Homeownership Decisions," The Review of Economics and Statistics, MIT Press, vol. 96(4), pages 618-637, October.
    3. Tracy M. Turner & Marc T. Smith, 2009. "Exits From Homeownership: The Effects Of Race, Ethnicity, And Income," Journal of Regional Science, Wiley Blackwell, vol. 49(1), pages 1-32.
    4. repec:eee:juecon:v:99:y:2017:i:c:p:107-119 is not listed on IDEAS
    5. Hilber, Christian A.L., 2005. "Neighborhood externality risk and the homeownership status of properties," Journal of Urban Economics, Elsevier, vol. 57(2), pages 213-241, March.
    6. Steven Sheffrin & Tracy Turner, 2001. "Taxation and House-Price Uncertainty: Some Empirical Estimates," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(4), pages 621-636, August.
    7. Englund, Peter & Hwang, Min & Quigley, John M, 2002. "Hedging Housing Risk," The Journal of Real Estate Finance and Economics, Springer, vol. 24(1-2), pages 167-200, Jan.-Marc.
    8. Tal Modai-Snir & Pnina Plaut, 2015. "Intra-metropolitan residential mobility and income sorting trends," Letters in Spatial and Resource Sciences, Springer, vol. 8(3), pages 291-305, November.
    9. Dusansky, Richard & Koc, Cagatay, 2007. "The capital gains effect in the demand for housing," Journal of Urban Economics, Elsevier, vol. 61(2), pages 287-298, March.
    10. Richard Dusansky & Çağatay Koç & Ilke Onur, 2012. "Household Housing Demand: Empirical Analysis and Theoretical Reconciliation," The Journal of Real Estate Finance and Economics, Springer, vol. 44(4), pages 429-445, May.
    11. Jansson, Thomas, 2013. "Housing Choices and Labor Income Risk," Working Paper Series 272, Sveriges Riksbank (Central Bank of Sweden).
    12. Chakrabarty, Durba & Osei, Michael J. & Winters, John V. & Zhao, Danyang, 2017. "Are Immigrant and Minority Homeownership Rates Gaining Ground in the US?," IZA Discussion Papers 10852, Institute for the Study of Labor (IZA).
    13. McLeish, Kendra N. & Oxoby, Robert J., 2007. "Gender, Affect and Intertemporal Consistency: An Experimental Approach," IZA Discussion Papers 2663, Institute for the Study of Labor (IZA).
    14. Christian A. L. Hilber & Wouter Vermeulen, 2016. "The Impact of Supply Constraints on House Prices in England," Economic Journal, Royal Economic Society, vol. 126(591), pages 358-405, March.
    15. Sejeong Ha & Christian A. L. Hilber, 2013. "Do Long Distance Moves Discourage Homeownership? Evidence from England," SERC Discussion Papers 0141, Spatial Economics Research Centre, LSE.
    16. Hilber, Christian A.L. & Liu, Yingchun, 2008. "Explaining the black-white homeownership gap: The role of own wealth, parental externalities and locational preferences," Journal of Housing Economics, Elsevier, vol. 17(2), pages 152-174, June.
    17. Heather M. Luea, 2008. "The Impact Of Financial Help And Gifts On Housing Demand And Cost Burdens," Contemporary Economic Policy, Western Economic Association International, vol. 26(3), pages 420-432, July.
    18. Turner, Tracy M. & Luea, Heather, 2009. "Homeownership, wealth accumulation and income status," Journal of Housing Economics, Elsevier, vol. 18(2), pages 104-114, June.

    More about this item

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations


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