Abstract
AbstractThis paper documents that the drop in young homeownership is more persistent among non‐college graduates compared to college graduates: while some college graduates postpone home purchasing, non‐college graduates are likely to remain long‐term renters. I develop a model showing that the combination of rising college share and a widening education‐driven income gap accounts for the delayed purchasing of college graduates and the lack of purchasing among non‐college graduates. Exploiting cross‐city variation, I verify the implications of the model and show that the mechanism can quantitatively account for the diverging ownership decisions between the two education groups from 1980 to 2019.
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