Borrowing Constraints and the Tenure Choice of Young Households

Haurin, Donald R.; Hendershott, Patric H.; Wächter, Susan M.

doi:10.3386/w5630

“…The negative relationship between household's credit quality constraints and the propensity to own is also well documented in the empirical literature (e.g. Linneman and Wachter 1989, Haurin et al 1997, Quercia et al 2003, and Barakova et al 2003 in the US, or Bourassa 1995, in Australia) 1 .…”

Section: Introductionmentioning

confidence: 91%

“…Linneman and Wachter 1989, Bourassa 1995, Haurin et al 1997, and Barakova et al 2003. However, the traditional estimation of a univariate probit model will provide an inconsistent estimation for β, γ, and δ if the error term in a choice equation where CC i is endogenous is correlated with ε i (see Woolbridge 2002, Ch.…”

Section: Econometric Modelmentioning

confidence: 99%

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

Díaz-Serrano

¹

2005

Journal of Housing Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Forschungsinstitut zur Zukunft der ArbeitInstitute for the Study Barriers to homeownership have traditionally been an important research and policy issue. In particular, the role of income volatility and credit constraints have been one of the main focuses in this concern. In this paper we test for the first time whether the underlying nature behind the negative effect of income uncertainty on the owner-occupancy propensities is driven by risk aversion, as it is assumed in most of the theoretical models, or on the contrary it is driven by credit constraints. The former question emerges from the plausible assumption that households facing higher income volatility are also expected to face borrowing constraints. To disentangle this puzzle, we use an unusually rich data coming from the Italian Survey of Household Income and Wealth carried out by the Bank of Italy. Our results confirm that in Italy both labor income uncertainty and credit constraints exert a significant negative effect on the probability of homeownership. Our main findings indicate that the negative relationship between labor income uncertainty and the owner-occupancy propensities are just driven by households' risk aversion, while credit constraints play no role.JEL Classification: D1, R0, J0

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“…Other control variables comprise of demographic, financial, and socioeconomic characteristics measured in 1994. Among the control variables, age is included because of its association with financial asset holdings in prior literature (Haurin, Hendershott, and Wachter 1996). Prior research has shown that Whites were more likely than minorities to hold high-risk and high-return assets (Keister 2000).…”

Section: Independent Variablesmentioning

confidence: 99%

Individual Wealth Accumulation: Why Does Dining Together as a Family Matter?

Chatterjee¹,

Palmer²,

Goetz³

2015

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This study uses data from the Panel Study of Income Dynamics to examine whether selfregulation, proxied by regularly dining together with family, is associated with better financial preparedness and greater wealth accumulation across time among households. Findings reveal that individuals who had sufficient self-regulation to regularly eat meals together with their family, increased wealth at a faster rate than others between 1994 and 2004. Moreover, those who exhibited self-regulation by frequently spending mealtime with their family showed greater preference for investment portfolio diversification. Consistent with other studies, results indicate that wealth accumulation increased with age, income, and educational attainment.

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“…Other studies have consistently found that wealth and to a lesser extent credit constraints are more important than income constraints in limiting access to homeownership (eg. Barakova, Bostic, Calem, and Wachter 2003); others also point to the cost of owning relative to renting as a significant determinant (Haurin, Hendershott and Wachter 1997).…”

Section: Previous Researchmentioning

confidence: 99%

Mortgage Market Maturity and Homeownership Inequality Among Young Households: A Five-Country Perspective

Bičáková

¹

,

Sierminska

²

2008

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly. cross-country variation in homeownership rates and the homeownership-income inequality among young households in Finland, Germany, Italy, the UK and the US, and relate it to cross-country differences in mortgage market maturity. We find that aside from Italy, homeownership rates and inequality in the four countries correspond to their mortgage take up rates and its distribution across income, reflecting the different degree of development of their respective mortgage markets. In Italy, alternative ways of financing, such as family transfers, substitute the limited mortgage availability and explains the second highest homeownership rate in our sample, despite the lowest mortgage take up. The mortgage market in the UK is the most open and the most equal, which leads to the highest and most equally distributed homeownership in this country as well. The mortgage market in Germany is on the other side of the spectrum with very low mortgage take-up rates and strong dependence of homeownership and mortgage take up on household income. Finland and the US are in-between. Counterfactual predictions suggest that although household characteristics play some role in explaining the variation in home ownership rates across the five countries, it is mostly the country specific effects of the...

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Borrowing Constraints and the Tenure Choice of Young Households

Cited by 148 publications

References 21 publications

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

On the negative relationship between labor income uncertainty and homeownership: Risk-aversion vs. credit constraints

Individual Wealth Accumulation: Why Does Dining Together as a Family Matter?

Mortgage Market Maturity and Homeownership Inequality Among Young Households: A Five-Country Perspective

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