Get access

WHY HAS HOME OWNERSHIP FALLEN AMONG THE YOUNG?

Authors

  • Jonas D. M. Fisher,

    1. Federal Reserve Bank of Chicago, U.S.A.; University of Southampton and IFS, U.K., and University of Iowa, U.S.A.
    Search for more papers by this author
  • Martin Gervais

    1. Federal Reserve Bank of Chicago, U.S.A.; University of Southampton and IFS, U.K., and University of Iowa, U.S.A.
    Search for more papers by this author
    • We thank anonymous referees, Francesco Caselli, Morris Davis, François Ortalo-Magné, Filippo Scoccianti, and seminar participants at various institutions for their comments. We are grateful to Faisal Ahmed, Nishat Hasan, and Eric Vogt for excellent research assistance. Gervais gratefully acknowledges financial assistance from the ESRC for this project. The views expressed herein are those of the authors and do not necessarily represent those of the Federal Reserve Bank of Chicago or the Federal Reserve System. Please address correspondence to: Jonas D. M. Fisher, 230 South LaSalle Street, Chicago, IL 60604-1413, U.S.A. E-mail: jfisher@frbchi.org.


  • Manuscript received July 2009; revised April 2010.

Abstract

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 2001–5 housing boom. The 1980–2000 decline in young home ownership occurred as improvements in mortgage opportunities seemingly made it easier to purchase a home. This article uses an equilibrium life-cycle model calibrated to micro and macro evidence to understand these developments. A trend toward marrying later mechanically lowers young home ownership after 1980. We show that the large rise in earnings risk that occurred after 1980 can easily account for the remaining decline in young home ownership.

Get access to the full text of this article

Ancillary