House Prices and Marital Stability

Martin Farnham, Lucie Schmidt and Purvi Sevak

American Economic Review, 2011, vol. 101, issue 3, 615-19

Abstract: We investigate the effect of house price changes on divorce using data for 1991-2010 from the Current Population Survey and the Federal Housing Finance Agency. Our findings suggest that changing house prices significantly affect the share of a cohort that is divorced, and that these effects are asymmetric with respect to housing gains versus losses. In addition, we find differential effects for groups that are more likely to be homeowners versus renters. Some of this evidence is consistent with homeowners being locked into their homes--and hence marriages--by increased transactions costs in down markets.

Date: 2011
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