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Wealth Accumulation and Housing Choices of Young Households: An Exploratory Investigation

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

This paper describes the wealth accumulation of American youth and relates this behavior to their eventual housing choices. We develop a data set that links wealth profiles of youth with constant- quality house prices and tenure choice. A panel data set is compiled for youth age 20-33 for the years 1985 through 1990. We construct wealth profiles for each household over the six year period and indicate how wealth varies with labor supply, marriage, fertility, gender, education, race/ethnicity, and tenure choice. We find renters' wealth accumulates rapidly in the year before and year of first homeownership. The factors related to this increase are marriage, increased labor supply by married women, and gifts/inheritances. Of particular interest is the finding of an inverse U-shaped relationship between the local real price of housing and middle and upper income renters' wealth and married female labor supply. Also, youth in high housing cost localities tend to live in groups at a greater rate compared to those in low cost areas.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5070.

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Date of creation: Mar 1995
Date of revision:
Publication status: published as Journal of Housing Research, vol. 7, no. 1, 1996, pp. 33-57
Handle: RePEc:nbr:nberwo:5070
Note: PE
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  1. W. G. Gale & J. K. Scholz, . "Intergenerational transfers and the accumulation of wealth," Institute for Research on Poverty Discussion Papers 1019-93, University of Wisconsin Institute for Research on Poverty.
  2. Engelhardt Gary V., 1994. "House Prices and the Decision to Save for Down Payments," Journal of Urban Economics, Elsevier, vol. 36(2), pages 209-237, September.
  3. Francine D. Blau & John W. Graham, 1989. "Black-White Differences in Wealth and Asset Composition," NBER Working Papers 2898, National Bureau of Economic Research, Inc.
  4. Stephen A. Buser & Anthony B. Sanders, 1983. "Tenure Decisions Under a Progressive Tax Structure," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 11(3), pages 371-381.
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