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Saving Up or Settling Down: Home Ownership over the Life Cycle

Author Info

  • Jonathan Halket

    (University of Essex)

  • Santhanagopalan Vasudev

    (University of Essex)

Abstract

In a Bewley model with endogenous price volatility, home ownership and mobility across locations and jobs, we assess the contribution of financial constraints, housing illiquidities and house price risk to home ownership over the life cycle. The model can explain the rise in home ownership and fall in mobility over the life cycle. While some households rent due to borrowing constraints in the mortgage market, factors that affect propensities to save and move, such as risky house values and transactions costs, are equally important determinants of the ownership rate. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2013.06.002
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 17 (2014)
Issue (Month): 2 (April)
Pages: 345-366

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Handle: RePEc:red:issued:12-89
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Keywords: Home ownership; Incomplete markets; Illiquid assets; Financial constraints;

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Find related papers by JEL classification:
  • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
  • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
  • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
  • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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Cited by:

  1. Bulent Guler, 2010. "Innovations in Information Technology and the Mortgage Market," 2010 Meeting Papers 856, Society for Economic Dynamics.
  2. Morris A. Davis & Stijn Van Nieuwerburgh, 2014. "Housing, Finance and the Macroeconomy," NBER Working Papers 20287, National Bureau of Economic Research, Inc.
  3. Cem Aysoy & Cevriye Aysoy & Semih Tumen, 2014. "Quantifying and Explaining Stickiness in Housing Rents : A Turkish Case Study with Micro-level Data," Working Papers 1409, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.

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