Mortgage subsidies, homeownership, and marriage: Effects of the VA loan program

Judith S. Ricks

Regional Science and Urban Economics, 2021, vol. 87, issue C

Abstract: This paper analyzes the effect of mortgage subsidies on homeownership and marriage. The empirical design exploits both access to the Veteran’s Administration Loan Guaranty Program and geographic variation in house prices. The results show that veterans living in one standard deviation higher house price areas had 22.7 percent higher homeownership and 8.7 percent higher marriage. These differences cannot be explained by differences in income or educational attainment. The evidence supports that reductions in the down payment constraint mattered more than the relative cost homeownership. This suggests that mortgage subsidies affect housing demand through both the homeownership and household formation channels.

Keywords: Housing policy; Mortgage subsidies; Household formation; Marriage (search for similar items in EconPapers)
JEL-codes: R20 R21 R28 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:87:y:2021:i:c:s0166046221000107

DOI: 10.1016/j.regsciurbeco.2021.103650

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