Borrowing Constraints, Home Ownership and Housing Choice: Evidence from Intra-Family Wealth Transfers
forthcoming: Journal of Money, Credit and Banking
70 Pages Posted: 15 Sep 2016 Last revised: 21 Aug 2018
Date Written: March 23, 2018
We study the impact of borrowing constraints on home ownership and housing demand by comparing the tenure choice and housing quality of consumers who receive intra-family wealth transfers to those that do not. Our analysis is based on household-level panel data providing information on the receipt of wealth transfers, changes in tenure status as well as changes in the size and quality of housing. On average we find that the receipt of a wealth transfer increases the propensity of consumers to transition from renters to home-owners by 6-8 percentage points (35% of the sample mean). Additional analyses suggest that this effect is unlikely to be driven by wealth effects and thus can be attributed to the relaxation of borrowing constraints. 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