EconPapers    
Economics at your fingertips  
 

Accounting for changes in the homeownership rate

Matthew Chambers (), Carlos Garriga () and Don Schlagenhauf

No 2007-21, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: After three decades of being relatively constant, the homeownership rate increased over the 1994–2005 period to attain record highs. The objective of this paper is to account for the observed boom in ownership by examining the role played by changes in demographic factors and innovations in the mortgage market that lessened down payment requirements. To measure the aggregate and distributional impact of these factors, we construct a quantitative general equilibrium overlapping-generation model with housing. We find that the long-run importance of the introduction of new mortgage products for the aggregate homeownership rate ranges from 56 percent to 70 percent. Demographic factors account for between 16 percent and 31 percent of the change. Transitional analysis suggests that demographic factors play a more important but not dominant role farther from the long-run equilibrium. From a distributional perspective, mortgage market innovations have a larger impact on participation rate changes of younger households, and demographic factors seem to be the key to understanding the participation rate changes of older households. Our analysis suggests that the key to understanding the increase in the homeownership rate is the expansion of the set of mortgage contracts. We test the robustness of this result by considering changes in mortgage financing after World War II. We find that the introduction of the conventional fixed-rate mortgage, which replaced balloon contracts, accounts for at least 50 percent of the observed increase in homeownership during that period.

New Economics Papers: this item is included in nep-dge and nep-ure
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.frbatlanta.org/filelegacydocs/wp0721.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.frbatlanta.org/filelegacydocs/wp0721.pdf [301 Moved Permanently]--> https://www.frbatlanta.org/filelegacydocs/wp0721.pdf)

Related works:
Journal Article: ACCOUNTING FOR CHANGES IN THE HOMEOWNERSHIP RATE (2009) Downloads
Working Paper: Accounting for changes in the homeownership rate (2007) Downloads
Working Paper: Accounting for Changes in the Homeownership Rate (2005) Downloads
Working Paper: Accounting for Changes in the Homeownership Rate (2004) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedawp:2007-21

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Elaine Clokey ().

 
Page updated 2019-10-19
Handle: RePEc:fip:fedawp:2007-21