The Role of Parents on the Home Ownership Experience of Their Children: Evidence from the Health and Retirement Study

Abstract

We construct matched panel data sets of adult children with their parents to study the role of lagged parental attributes on subsequent home ownership decisions between 2000 and 2012. Earlier research has demonstrated inter-generational wealth transfers from parents to children are an important source of upfront equity used to purchase a first home, although parental attributes are often omitted as determinants of tenure due to data limitations. A significant role is found for lagged parental wealth on the ability of adult children to become and remain home owners over this period. Endowed differences in parental wealth are estimated to account for the largest explainable share of the white/non-white gap in becoming a homeowner, and maintaining home ownership once attained.

Keywords: Home Ownership, Foreclosure, Household Formation, Inter-Generational Transfers

JEL Classification: D31, D64, I38, J15, R21, R28, R31