Changing marital transitions and homeownership among young households

Abstract

This paper shows that the evolving likelihood of marriage and divorce is an important factor that helps account for the changes in homeownership rates among young single households and married couples from 1970 to the mid 1990s. To investigate potential mechanisms behind these observed changes, I develop and estimate a life-cycle model that incorporates housing decisions and age-dependent shocks associated with marriage and divorce. The findings indicate that the declined likelihood of marriage, along with increased returns on non-housing assets, helps generate the observed rise in homeownership among singles aged 25-44 years. Conversely, the increased likelihood of divorce, in addition to higher house prices and labor market volatility, contributes to the decrease in homeownership among young couples.