Expected Home Ownership and Real Wealth Accumulation of Youth

Donald Haurin, Patric Hendershott and Susan Wachter

No 5629, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper describes the real wealth accumulation of American youth and relates this behavior to variations in real constant-quality house prices in their localities of residence. We argue that increases in the real constant-quality house price have two offsetting effects on wealth. First, the greater the local constant-quality price of housing, the greater the wealth needed to meet the lender imposed down payment constraint if housing demand is price inelastic. However, increased real constant-quality house price reduces the likelihood of home ownership and thus the desire the accumulate wealth needed for a down payment. Using a panel data set for youth age 20-33 for the years 1985 through 1990 we find that the combined direct and indirect impact of variations in real constant-quality house price on wealth is modest for changes near the average real house price, but youths' wealth declines substantially in areas with high real house price.

JEL-codes: E21 R21 (search for similar items in EconPapers)
Date: 1996-06
Note: PE
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Citations: View citations in EconPapers (14)

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