What are the Perceived Barriers to Homeownership for Young Adults?

33 Pages Posted: 21 Mar 2016

See all articles by Jeff Larrimore

Jeff Larrimore

Board of Governors of the Federal Reserve System

Jenny Schuetz

Brookings Institution

Samuel Dodini

Cornell University, College of Human Ecology, Students

Date Written: 2016-03-08

Abstract

As the U.S. emerges from the Great Recession, there is concern about slowing rates of new household formation and declining interest in homeownership, especially among younger households. Potential reasons that have been posited include tight mortgage credit and housing supply, changing preferences over tenure in the wake of the foreclosure crisis, and weak labor markets for young workers. In this paper, we examine how individual housing choices, and the stated motivations for these choices, reflect local housing affordability and individual financial circumstances, focusing particularly on young households. The analysis makes use of new individual-level data from the Survey of Household Economics and Decisionmaking (SHED). We find that housing affordability is correlated with county-level tenure rates and individual-level probability of homeownership for households with heads under age 40. However, it appears that young households' perceived barriers to homeownership are more closely related to individual financial circumstances than local housing market conditions.

Keywords: Housing demand, consumer preferences, household formation, tenure choice

JEL Classification: D10, R1, R21, R31

Suggested Citation

Larrimore, Jeff and Schuetz, Jenny and Dodini, Samuel, What are the Perceived Barriers to Homeownership for Young Adults? (2016-03-08). FEDS Working Paper No. 2016-021. Available at SSRN: https://ssrn.com/abstract=2750312 or http://dx.doi.org/10.17016/FEDS.2016.021

Jeff Larrimore (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Jenny Schuetz

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Samuel Dodini

Cornell University, College of Human Ecology, Students ( email )

Ithaca, NY
United States

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