Homeownership regimes and class inequality among young adults

Abstract

In this study, we merge the literature on homeownership regimes, which focuses to a lesser extent on the consequences of wealth and social inequality, with the literature on wealth and social stratification, which overlooks the importance of homeownership regimes in contributing to those inequalities. Within this framework, we examine to what extent homeownership regimes shape class inequality in homeownership among young adults and the mortgage debt burden that usually accompanies it. We first develop an updated typology of homeownership regimes that incorporates the role of the family via intergenerational wealth transfers (IWT) such as gifts and housing assets. This dimension was theoretically underdeveloped and empirically absent from previous homeownership typologies. Second, we employ this typology to investigate class-based gaps in homeownership and mortgage debt burden within and between homeownership regimes. This is done by pooling data for a total of 20 countries from two sources: the European Union Statistics on Income and Living Conditions (EU-SILC) 2013–2014 (EuroStat) for EU countries, and the Household Expenditure Survey 2012–2013 (CBS) for Israel. Using multivariate modeling, we find that homeownership regimes in which IWT in the form of financial support is common practice increase class inequality in homeownership compared to regimes in which IWT of assets is common practice. Contrary to the literature suggesting that liberal mortgage markets advance inclusion, it appears that in the homeownership regime characterized by the most liberal housing finance system (which includes Northern European countries and the Netherlands), class inequality in mortgaged homeownership is the widest but class inequality in mortgage debt burden is the narrowest. Homeownership regimes characterized by IWT of assets (which include Southern and Central Eastern European countries) reveal the opposite patterns. We discuss the implications of our findings for the literature on homeownership regimes and wealth inequality, with a specific focus on young adults.

Intergenerational wealth transmission and homeownership in Europe–a comparative perspective

“…In this context of mortgage market finanacilization, a growing body of scholarship on housing regime configurations has developed. It is mainly, but not solely, focused on the role of the housing finance system as the main institution that shapes homeownership across countries, which is absent in the scholarship on welfare state regimes [79][80][81] and in the literature about labor market instability and growing income inequality [30,31,37].This framework seems ideal for a comparative study of homeownership inequality among young adults, since it captures the penetration of mortgage liberalization across countries that has burdened the present cohort of young adults with higher mortgage debt than previous cohorts of young adults, although to different degrees across countries and classes [26,82,83]. We next draw on the main macro-level institutions that have been addressed in the housing regime literature to better understand how they moderate the association between family financial support and homeownership within and across countries.…”

“…Given the high correlation between IWT, wealth, and homeownership, there is a surprising dearth of studies evaluating the role of parental wealth transmission and its extent when studying the transition to first-time homeownership among young adults under differential institutional arrangements. A recent study documented the importance of IWT in constructing new homeownership typologies for young adults up to current times [ 26 ]. However, it did not consider IWT at the household level or the extent of IWT provided, which is a key factor in the process of accessing first-time homeownership.…”

“…Our study contributes to the sociology debate about wealth and social inequality from the point of view of housing studies. Specifically, we provide a broader perspective from the literature of housing regime configurations and mortgage market financialization, which have been overlooked in previous contributions concerning homeownership and wealth inequality in the sociological literature (also suggested by [ 7 , 18 , 26 ]). We show how opportunities and constraints are shaped in the housing market and how they vary for the current cohort of young adults, situated under different institutional arrangements at the same point in time.…”