The Effects of Homeownership on Children's Outcomes: Real Effects or Self‐Selection?

This article examines whether there is a “homeownership effect” for lower‐income racial and ethnic groups who have been the target of public policies to expand homeownership. We use two different methods to account for selection, statistical matching and instrumental variable analysis; test direct and indirect (mediator) effects of homeownership on children's cognitive achievement, behavior problems and health using the Panel Study of Income Dynamics and its Child Development Supplement; and replicate the main effects tests using the National Longitudinal Survey of Youth. We find little evidence of beneficial homeownership effects and suggest that previous analyses may have mistaken selection differences for the effect of homeownership itself.     

The Influence of Household Formation on Homeownership Rates Across Time and Race

Homeownership rates equal the number of households that own homes divided by the number of households in the population. Differences in the propensity to form a household, therefore, may contribute to changes in homeownership rates over time in addition to long-standing racial gaps in homeownership. We examine these issues on an age-specific basis using data from the 1970 to 2000 public use microsamples of the decennial census. Results indicate that lower headship rates tend to reduce homeownership rates. This pattern is most notable for individuals in their early and mid 20s. For these individuals, declining headship rates between 1970 and 2000 reduced homeownership rates by three to five percentage points. Moreover, 2000 African American headship rates narrow white–black gaps in homeownership by roughly three percentage points, whereas 2000 Hispanic headship rates widen white–Hispanic gaps in homeownership by two to three percentage points. Thus, controlling for differences in headship behavior, white–black homeownership gaps are somewhat more severe than previously recognized, but the reverse is true for white–Hispanic gaps.     

Language, Agglomeration and Hispanic Homeownership

As of the fourth quarter of 2007, 74.9% of white non-Hispanic families but only 48.5% of Hispanic families owned homes. We argue that low rates of homeownership in Hispanic communities create a self-reinforcing mechanism that contributes to this large disparity. In part, this occurs because proximity to other homeowners belonging to a family's social network improves access to information about how to become a homeowner. Role model effects may also be relevant. We investigate these issues using household-level data on out-of-state movers from the 2000 Decennial Census. Three especially important results are obtained. First, proximity to Hispanic homeowners in the 1995 place of residence increases the propensity of a Hispanic family to own a home in 2000. Second, that effect is especially strong with respect to proximity to weak English-speaking Hispanic homeowners. Third, these patterns hold regardless of the Hispanic family's own ability to speak English. From a policy perspective, these results suggest that local programs designed to promote homeownership among weak English-speaking Hispanic families likely increase Hispanic homeownership beyond just the immediate program participants.     

Does Homeownership Prolong the Duration of Unemployment?

We examine the effects of homeownership on individuals' unemployment durations. An unemployment spell can terminate with a job or with nonparticipation. The endogeneity of homeownership is addressed by estimating a full maximum likelihood function jointly modeling the competing hazards and the probability of being a homeowner. Unobserved factors contributing to the probability of being a homeowner are allowed to be correlated with unobservable heterogeneity in the hazard rates. Not controlling for ownership selection, there is neither a significant difference in the job‐finding hazard nor in the nonparticipation hazard of unemployed owners and renters. If we jointly model the ownership selection, we find that unemployed homeowners are more likely to find a job than renters.     

The Impacts of Borrowing Constraints on Homeownership

This paper utilizes microdata to directly quantify the impact of mortgage underwriting criteria on individual homeownership propensities. To determine whether a family is constrained by these criteria, the optimal home purchase price is estimated. The results indicate that wealth and income constraints both reduce homeownership propensities, with a stronger impact for wealth constraints. Mortgage market innovations of the early 1980s seem to have reduced these effects. The research indicates, however, that even in well-developed capital markets, the presence of borrowing constraints adversely affects homeownership propensities.     

The Dynamics of Homeownership: Eliminating the Gap Between African American and White Households

This article uses a sample of young renters from the Panel Study of Income Dynamics and a continuous‐time econometric model to explore not only the initial tenure transition to first‐time homeownership, but also subsequent possible tenure transitions to a second owned home, back to rental tenure and, indirectly, to a second owned home from rental tenure. Once estimated, the predicted probabilities of these transitions are used to calculate the probability of homeownership at various times for households in the sample. These estimates are done separately for African Americans and whites for two different 11‐year time intervals, 1987–1997 and 1993–2003. A primary result is that if African American education, income, net wealth and savings behavior could be brought in line with that of white households the majority of the racial gap in homeownership could be eliminated in either time period.     

Housing Tenure Transitions of Older Households: What is the Role of Child Proximity?

This study examines the role of proximity of children to their parents and recent moves of children within a proximate distance in housing tenure transitions of older households. This study is the first to investigate the interplay between health status of older households, moves of their children and a household's decision to make housing tenure transitions. In doing so, we rely on longitudinal household data from the Panel Study of Income Dynamics with residential location information at the census tract level. The results demonstrate that after controlling for the financial and demographic characteristics of children, living near children reduces the likelihood of making a housing tenure transition for older households, but that the impact of distance is not monotonic with respect to the degree of geographic distances. The results also demonstrate that if a child enters or moves closer to her or his parents’ home, it increases the probability that older households exit homeownership. Finally, we find no evidence that children's moves mitigate the likelihood that their older parents whose health deteriorates become renters.     

Are Rising College Premiums Capitalized into House Prices? Evidence from China

Many areas in China experienced steeply rising house prices beginning in 2003. We test whether a change in local residency requirements may have played a role in driving up house prices in some places by tying access to Chinese universities to local homeownership status in the presence of a rising college premium. We generate a novel dataset that combines China housing market and neighborhood data with household and university admission data. We find evidence of capitalization effects and a sizable increase in the likelihood of homeownership postpolicy change in places with the greatest preferential access to China's elite universities.     

Inflation,Taxes, and the Demand For Housing*

Inflation affects homeownership and housing adversely through the “real-payment tilt” of the conventional mortgage. Expectations of additional housing price appreciation, however, may induce households to invest in housing. This paper uses household data to estimate the demand for homeownership and housing, and it takes explicit notice of expectations of housing price appreciation. The results indicate for each 1% increase in the inflation rate that the conditional probability of purchase falls by 3%. Interest rate effects outweigh appreciation and tax effects. Given the decision to purchase, housing appreciation expectations do not have large effects on the amount purchased.     

Homeownership Determinants for Chinese Americans: Assimilation, Ethnic Concentration and Nativity

Chinese homeownership rates in the Los Angeles Consolidated Metropolitan Statistical Area adjusted by socioeconomic and housing market characteristics are, on average, 18 percentage points higher than those of native white households. This finding runs contrary to most immigration literature, which suggests that immigrants usually lag behind the host society in measures of economic well-being. This study focuses on two additional factors, which most economic studies of homeownership choice ignore, that may play a role in helping Chinese households achieve high homeownership in ways that other immigrant groups do not. The results of this analysis find that the high homeownership rates cannot be explained by the English skills of households. The cultural influence of homeowning peers may have partially contributed to the higher homeownership of Chinese households. While living in ethnic Chinese communities lowers homeownership rates, in general, it helps improve the likelihood that Chinese immigrants will own a home. Finally, we find that there is great diversity among Chinese subgroups with respect to their likelihood of owning a home, but very little diversity with respect to the education and income level of Chinese households across subgroups.     

Market Conditions and Housing Choices: A Comparison of Homeownership Across Three Decades

This article uses information on out‐of‐pocket housing cost and house price appreciation along with the geo‐coded version of the Panel Study of Income Dynamics to consider the differences in the impact of these and other variables on the tenure choices of sample households across three time periods, the 1970s, the 1980s and the 1990s. Specifically, an extended continuous time probability model is used to examine households' transitions from renting to owning and subsequent possible transitions either back to rental tenure or to another owned home during our three observation periods. Coefficient estimates show that financial variables such as house price appreciation and out‐of‐pocket housing cost play an important role in determining all the transitions. In addition, the analysis demonstrates the interesting result that the cumulative likelihoods of homeownership derived from the model are consistently lower than the probabilities of an initial transition to homeownership from rental tenure during the observation period. Finally, the magnitude and timing of the impact on homeownership of a policy experiment that eliminates the mortgage interest deduction are shown to differ substantially across the three decades.     

Homeownership Returns, Tenure Choice and Inflation

This paper empirically investigates the impact of inflation on homeownership returns and tenure choice when the assumptions underlying the user cost of housing are modified to reflect separately the effects of unanticipated and anticipated inflation. The analysis demonstrates that when the user cost model is specified to reflect the impact of anticipated inflation on house prices, the mortgage interest rate and the capitalization rate, the returns to homeownership are lower than determined by previous user cost studies and are consistent with a reasonably efficient market.     

Mobility, Residential Location and the American Dream: The Intrametropolitan Geography of Minority Homeownership

This article applies data from Washington, DC, Chicago and Los Angeles to estimate three-level nested multinomial logit models of household mobility, residential location and homeownership tenure choice. Model simulation indicates that shocks to income can significantly elevate the homeownership attainment of minority households; however, their urban settlement and homeownership patterns remain substantially more concentrated than those of whites. Simulated equilibration of black economic status with that of whites results in an approximate doubling of homeownership rates among black movers to central city areas. In contrast, homeownership rates among black movers to suburban and outlying areas lag far behind those of whites.     

Another Look at Tenure Choice, Inflation, and Taxes

The purpose of this paper is to explore the impact of inflation on the demand for housing. The first part of the paper presents a theoretical model that identifies the effects of inflation on the after-tax cost of housing and the choice between rental and owner-occupied housing. The second part discusses the results of a simulation model that measures the effect of inflation on the aggregate demand for housing, the aggregate homeownership rate, and the price of housing. The paper concludes that while inflation can be expected to increase the aggregate demand for housing and the price of housing relative to the general price level, inflation should ultimately lead to lower rates of homeownership. A corollary that is probably more relevant today is that lower inflation rates should reduce the real value of the housing stock and increase the homeownership rate. The paper also contains forecasts of the impact of the Tax Reform Act (TRA) of 1986 upon housing demand and the probability of homeownership for a variety of households.     

What factors of early-stage innovative projects are likely to drive projects’ success? A longitudinal analysis of Korean entrepreneurial firms

Previous studies have identified the factors affecting successful technology commercialization as outcomes of R&D projects. However, most of them have used cross-sectional data, whereas there is a dearth of literature using longitudinal data analysis. Longitudinal analysis is essential for investigating the characteristics of early-stage innovative projects due to the inherent time lag between project evaluation and commercialization. Therefore, this study examines the early-stage project characteristics that can be used as meaningful evaluation criteria for predicting success, particularly in technology commercialization. We collected data on the ex-ante evaluation results and ex-post commercialization results of R&D projects pursued by entrepreneurial firms. We then conducted a logistic regression analysis and identified three market-related factors as significant in driving technology commercialization success in the early stages of technology development: market potential, commercialization plan, and market condition.     

Mobility-Tenure Decisions and Financial Credit: Do Mortgage Qualification Requirements Constrain Homeownership?

Housing analysts have generally assumed that mortgage qualification requirements significantly constrain homownership, however there has been no empirical evidence of this effect. By explicitly modeling and estimating the impact of mortgage qualification requirements on households' mobility and tenure decisions, this paper provides the first empirical evidence of the effect of these criteria on homeownership. The estimation results suggest that in 1986, mortgage qualification criteria did not provide a large constraint on homeownership. However, they also show that the impact of these criteria increases as the flow costs of owning decrease relative to those of renting. This implies that the nationwide significance of these constraints will vary with fluctuations in the macro economy, and that policies designed to limit the effect of these requirements will be more successful in economic environments favorable to homeownership.     

The Boom,the Bust and the Future of Homeownership

This article investigates the boom and bust in U.S. homeownership rates over the 2000–2010 period. Using individual‐level census data, we first estimate 204 homeownership regressions stratified by household age (21, 22, …, 89) and survey year (2000, 2005 and 2009). Shift‐share methods confirm that changes in the model coefficients that reflect household attitudes, lending standards and other market conditions—but not population socioeconomics—were the primary driver of the boom and bust in homeownership over the decade. This pattern holds for nearly all age groups and is more pronounced for recent movers. Results also suggest that homeownership rates may have come close to bottoming out in early 2013 at 65% after falling roughly four percentage points from their peak in 2006. This suggests little lasting effect of the grand homeownership policy experiment of recent decades.     

Housing Tenure Choice in Australia and the United States: Impacts of Alternative Subsidy Policies

This article compares the homeownership rates of young households in Australia and the United States and evaluates the impacts of the two countries' different approaches to subsidizing homeownership. Since about 1950, Australia's rate of homeownership has consistently been higher than that of the United States. The homeownership rate for young adults is also significantly higher in Australia. While the United States allows mortgage interest and property taxes to be deducted from income for tax purposes, Australia has provided cash subsidies for down payments and mortgage payments. We conclude that differences in housing costs and household characteristics do not explain differences in ownership rates. We also conclude that differences in subsidy policies have only a minor impact on ownership rates.     

The Effect of Ability on Young Men's Self‐Employment Decision: Evidence from the NELS

Using the National Educational Longitudinal Study data, we examine the role of pre‐market abilities on young men's self‐employment decision. Our results indicate that cognitive and non‐cognitive abilities are two important, in opposing directions, predictors of self‐employment. We also find that cognitive and non‐cognitive abilities may differ in their malleability with the latter being more malleable during adolescence.     

Housing and the Economy: Popular Myths

This paper identifies and tries to clarify the effects of a number of changes in the system of delivering mortgage credit and housing subsidies. First, we examine the trends in housing and mortgage market data and policy. This review highlights the perceived relationships of these sectors to the rest of the economy. We then focus on and develop the relationship between four issues that have been fundamental stumbling blocks to the development of effective policy. The issues are: (1) homeownership affordability, (2) measures of housing needs, (3) the costs of cycles in housing production, and (4) the effects of federal mortgage credit programs.