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The Postwar Conquest of the Home Ownership Dream

Matthew Chambers (), Carlos Garriga () and Don Schlagenhauf
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Don Schlagenhauf: Federal Reserve Bank of St. Louis

No 2016-07, Working Papers from Towson University, Department of Economics

Abstract: The post-WorldWar II witnessed the largest housing boom in recent history. The objective of this paper is to develop a quantitative equilibrium model of tenure choice to analyze the key determinants in the co-movement between home ownership and house prices over the period 1940 to 1960. The parameterized model is consistent with key aggregate and distributional features observed in the 1940 U.S. economy and is capable of accounting for the observed postwar housing boom. The paper shows, both theoretically and quantitatively, that the key to explaining the co- movement is an asymmetric productivity change that favors the goods sector relative to the construction sector. Other factors such as demographics, income risk, and government policy are important determinants of the home ownership rate but have relatively small e¤ects on housing prices.

Keywords: Housing Finance; first-time buyers; life-cycle. (search for similar items in EconPapers)
JEL-codes: E2 E6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pke and nep-ure
Date: 2016-04, Revised 2016-04
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