Why Has Home Ownership Fallen among the Young?
49 Pages Posted: 21 Mar 2009
Date Written: March 6, 2009
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
JEL Classification: E0, J1, R21
Suggested Citation: Suggested Citation