The seminar will be held at the Visitor Centre at 15.15.
Martin Gervais: University of Southampton
Abstract:
Homeownership of households with ``heads'' aged 25-44 years
peaked in 1980. By the 2000 census the rate had fallen by
roughly ten percent and it recovered only partially during the
2001-2006 housing boom. The 1980-2000 decline in young
homeownership occurred as improvements in mortgage
opportunities made it demonstrably much easier to purchase a
home for the first time. This paper uses an equilibrium life
cycle model calibrated to micro and macro evidence to
understand why young homeownership fell over a period when it
became easier to own a home. We show that, in the presence of
proportional adjustment costs, a trend toward marrying later
and the increase in family income risk from delayed marriage,
marriage instability, and greater individual income risk are
sufficient to account for the decline in young homeownership.
We explain how changes to taxes, house prices, or household
mobility rates are unlikely to be important factors affecting
the decline.