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

See all articles by Kristian Blickle

Kristian Blickle

Federal Reserve Banks - Federal Reserve Bank of New York

Martin Brown

University of St. Gallen

Date Written: March 23, 2018

Abstract

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

Blickle, Kristian and Brown, Martin, Borrowing Constraints, Home Ownership and Housing Choice: Evidence from Intra-Family Wealth Transfers (March 23, 2018). forthcoming: Journal of Money, Credit and Banking. Available at SSRN: https://ssrn.com/abstract=2839217 or http://dx.doi.org/10.2139/ssrn.2839217

Kristian Blickle

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Martin Brown (Contact Author)

University of St. Gallen ( email )

Unterer Graben 21
St. Gallen, CH-9000
Switzerland

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