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Current Wealth Constraints on the Housing Demand of Young Owners

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  • Jones, Lawrence D

Abstract

In addition to generating housing services, owner-occupied housing units constitute a lumpy, risky asset in household portfolios. Analysis of these dual consumption/investment roles suggests the permanent wealth budget constraint in housing demand models should be decomposed into permanent returns from human capital and current net worth. For young owners, current net worth is hypothesized to be the dominant wealth component determining the quantity of housing demanded. Using a Canadian microdata base, evidence is found that net worth does provide both greater explanatory power and higher elasticities than labor earnings. Copyright 1990 by MIT Press.

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  • Jones, Lawrence D, 1990. "Current Wealth Constraints on the Housing Demand of Young Owners," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 424-432, August.
    • Handle: RePEc:tpr:restat:v:72:y:1990:i:3:p:424-32
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    Cited by:

    1. Hoon Cho & Kyung-Hwan Kim & James Shilling, 2012. "Seemingly Irrational but Predictable Price Formation in Seoul’s Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 44(4), pages 526-542, May.
    2. Engelhardt, Gary V., 1994. "Tax Subsidies to Saving for Home Purchase: Evidence from Canadian RHOSPs," National Tax Journal, National Tax Association, vol. 47(2), pages 363-88, June.
    3. Jan Rouwendal, 2009. "Housing Wealth and Household Portfolios in an Ageing Society," De Economist, Springer, vol. 157(1), pages 1-48, March.
    4. Goodman, Allen C., 2003. "Following a panel of stayers: Length of stay, tenure choice, and housing demand," Journal of Housing Economics, Elsevier, vol. 12(2), pages 106-133, June.
    5. Jonathan S. Skinner, 1994. "Housing and Saving in the United States," NBER Chapters, in: Housing Markets in the United States and Japan, pages 191-214, National Bureau of Economic Research, Inc.
    6. Renata Bottazzi, 2004. "Labour market participation and mortgage related borrowing constraints," IFS Working Papers W04/09, Institute for Fiscal Studies.
    7. Chien-Wen Peng & Jerry T. Yang & Tyler T. Yang, 2020. "Determinant of Allocation of Housing Inventory: Competition between Households and Investors," International Real Estate Review, Global Social Science Institute, vol. 23(3), pages 963-991.
    8. Forgionne, G. A., 1996. "Forecasting army housing supply with a DSS-delivered econometric model," Omega, Elsevier, vol. 24(5), pages 561-576, October.
    9. Engelhardt, Gary V., 1994. "Tax Subsidies to Saving for Home Purchase: Evidence From Canadian RHOSPs," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 363-388, June.
    10. Bellgardt Egon, 2000. "Wohnkosten und Besitzformwahl. Empirische Ergebnisse der Einkommens- und Verbrauchsstichprobe / Housing Costs and Tenure Choice. Empirical Results from the Einkommens- und Verbrauchsstichprobe," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(6), pages 653-668, December.
    11. Henrik Cronqvist & Florian Münkel & Stephan Siegel, 2014. "Genetics, Homeownership, and Home Location Choice," The Journal of Real Estate Finance and Economics, Springer, vol. 48(1), pages 79-111, January.
    12. Chien-Wen Peng & Jerry T. Yang & Tyler T. Yang, 2020. "Determinant of Allocation of Housing Inventory: Competition between Households and Investors," International Real Estate Review, Global Social Science Institute, vol. 23(3), pages 337-365.
    13. Fortin, Nicole M., 1997. "L’impact des règles de prêts hypothécaires sur l’offre de travail des femmes au Canada : évidence paramétrique et non paramétrique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(1), pages 129-159, mars-juin.
    14. Jones, Lawrence D., 1995. "Net wealth, marginal tax rates and the demand for home mortgage debt," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 297-322, June.

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