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The University of Southampton
EconomicsPart of Economic, Social and Political Science

0907 Why Has Home Ownership Fallen Among the Young? (M. Gervais & J. Fisher)

Discussion Paper 0907, "Why has home ownership fallen among the young?", by Martin Gervais & Jonas Fisher

We document that home ownership of households with “heads\" aged 25- 44 years fell substantially between 1980 and 2000 and recovered only partially during the 2001-2005 housing boom. The 1980-2000 decline in young home ownership occurred as improvements in mortgage opportunities made it easier to purchase a home. This paper uses an equilibrium life-cycle model calibrated to micro and macro evidence to understand why young home ownership fell over a period when it became easier to own a home. Our findings indicate that a trend toward marrying later and the increase in household earnings risk that occurred after 1980 account for 3/5 to 4/5 of the decline in young home ownership.

Keywords: Housing, home ownership, tenure choice, first-time home-buyers, Marriage, income risk

JEL Classification: E0, E2, J1, R21

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