Gifts, Down Payments, and Housing Affordability

J. OF HOUSING RESEARCH

Posted: 11 Oct 1996

See all articles by Christopher J. Mayer

Christopher J. Mayer

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Gary V. Engelhardt

Syracuse University - Center for Policy Research; Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

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

Mayer, Christopher J. and Engelhardt, Gary V., Gifts, Down Payments, and Housing Affordability. J. OF HOUSING RESEARCH. Available at SSRN: https://ssrn.com/abstract=9163

Christopher J. Mayer (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Gary V. Engelhardt

Syracuse University - Center for Policy Research ( email )

426 Eggers Hall
Syracuse, NY 13244
United States
315-443-4598 (Phone)
315-443-1081 (Fax)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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