To Buy or Not to Buy: Consumer Constraints in the Housing Market

Andreas Fuster and Basit Zafar

American Economic Review, 2016, vol. 106, issue 5, 636-40

Abstract: We use a strategic household survey to study the sensitivity of intended homeownership decisions to financing constraints. We find that the average stated likelihood of buying a home is strongly sensitive to the size of the required down payment, which we vary exogenously across three scenarios. This sensitivity is particularly high for respondents that appear more liquidity constrained based on observable characteristics (including current renters, or owners with low savings or low home equity). For renters, expectations of future rent inflation and of improvements to their personal financial situation also predict intention to buy.

JEL-codes: D14 R21 R31 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.p20161086
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Citations: View citations in EconPapers (29)

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