Liquidity Constraints, Wealth Transfers and Home Ownership
67 Pages Posted: 15 Sep 2016
Date Written: September 15, 2016
We study the impact of liquidity constraints on home ownership by comparing the tenure and housing choice of households who receive intra-family wealth transfers to those that do not. Our analysis is based on household-level panel data providing annual information on household characteristics, wealth transfers, tenure status as well as changes in the size and quality of housing. Our treatment effect estimates suggest that wealth transfers increase the propensity of households to transition to ownership by 15 to 20 percentage points. By contrast, wealth transfers do not increase the likelihood that existing homeowners “trade-up” to larger homes in better locations.
Keywords: Liquidity Constraints, Tenure Choice, Wealth Transfers, Macroprudential Policy
JEL Classification: D14, D31, D91, G18
Suggested Citation: Suggested Citation