Accounting for the decline in homeownership among the young

This paper documents that the drop in young homeownership is more persistent among non-college graduates compared to college graduates: while some college graduates postpone home purchasing, non-college graduates are likely to remain long-term renters. I develop a model showing that the combination of rising college share and a widening education-driven income gap accounts for the delayed purchasing of college graduates and the lack of purchasing among non-college graduates. Exploiting cross-city variation, I verify the implications of the model and show that the mechanism can quantitatively account for the diverging ownership decisions between the two education groups from 1980 to 2019.