Gifts, Down Payments, and Housing Affordability
J. OF HOUSING RESEARCH
Posted: 11 Oct 1996
Recent evidence shows that homeownership rates among young households have declined substantially since the mid-1980s. Although late household formation and the increasing user cost of housing are cited as contributing factors, aggregate data indicate that first-time home buyers are relying more on gifts from relatives and less on their own savings in accumulating the down payment.To explore the role of gifts in helping first-time buyers purchase homes, this article uses data from two sources: surveys of recent home buyers in 18 cities between 1988 and 1993 and Boston loan applicants in 1990. The evidence shows that financial constraints are important in explaining the increased reliance on gifts, with the receipt of a gift being negatively related to income and wealth and positively related to median house price. The evidence is mixed as to whether givers target gifts to certain types of households, such as young married couples.
JEL Classification: D31, R31
Suggested Citation: Suggested Citation