Urbanity, Financial Crisis and the Timing of Homebuying Decisions by Young Households

Dongshin Kim, Youngme Seo and Julia Freybote ()
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Dongshin Kim: Pepperdine University
Youngme Seo: Ryerson University
Julia Freybote: Portland State University

The Journal of Real Estate Finance and Economics, 2021, vol. 62, issue 4, No 1, 507 pages

Abstract: Abstract Large urban areas have a high appeal to young households, particularly highly educated ones, as they offer higher wages, more job opportunities and urban amenities. However, large urban areas are also characterized by higher rental rates and single-family home prices. We investigate the timing of homebuying decisions by young households (25 to 28 years) in large metropolitan (metro) areas compared to young households in other areas. Using the PSID database and Cox regression, we find that wealth, likelihood to move, being married, race and macro-economic variables affect the timing of homebuying decisions of young households irrespective of where they live. However, income is more important for the timing of homebuying decisions by young households in large metro areas than other areas and a college education is less important. Furthermore, large metro households are more likely to delay homeownership than households in other areas. In poor economic conditions such as the 2007 to 2009 financial crisis, mobility considerations are predominantly driving the timing of homebuying decisions by large metro households while income is most important for homebuying decisions of young households in other areas. Our results suggest that young homebuyers in large metro areas differ from those in other areas and that urbanity is important in understanding homebuyer behavior.

Keywords: Homeownership; First-time homebuyers; Intertemporal dynamics; Urban; Cox regression (search for similar items in EconPapers)
JEL-codes: O18 R21 R31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11146-020-09759-4

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