Homeownership Rates, Housing Policies, and Co-Residence Decisions

31 Pages Posted: 24 Jul 2023

See all articles by Nils Grevenbrock

Nils Grevenbrock

Goethe University Frankfurt - Research Center SAFE

Alexander Ludwig

Goethe University Frankfurt

Nawid Siassi

University of Konstanz - Faculty of Economics and Statistics

Multiple version iconThere are 2 versions of this paper

Date Written: July 19, 2023

Abstract

Homeownership rates differ widely across European countries. We document that part of this variation is driven by differences in the fraction of adults co-residing with their par-ents. Comparing Germany and Italy, we show that in contrast to homeownership rates per household, homeownership rates per individual are very similar during the first part of the life cycle. To understand these patterns, we build an overlapping-generations model where individuals face uninsurable income risk and make consumption-saving and housing tenure decisions. We embed an explicit intergenerational link between children and parents to cap-ture the three-way trade-off between owning, renting, and co-residing. Calibrating the model to Germany we explore the role of income profiles, housing policies, and the taste for inde-pendence and show that a combination of these factors goes a long way in explaining the differential life-cycle patterns of living arrangements between the two countries.

Keywords: Homeownership, Co-residence, Overlapping generations

JEL Classification: D15, E21, H31, R21

Suggested Citation

Grevenbrock, Nils and Ludwig, Alexander and Siassi, Nawid, Homeownership Rates, Housing Policies, and Co-Residence Decisions (July 19, 2023). SAFE Working Paper No. 396, Available at SSRN: https://ssrn.com/abstract=4519587 or http://dx.doi.org/10.2139/ssrn.4519587

Nils Grevenbrock

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Alexander Ludwig (Contact Author)

Goethe University Frankfurt

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Nawid Siassi

University of Konstanz - Faculty of Economics and Statistics ( email )

Universitaetsstr. 10
78457 Konstanz
Germany

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