The Effect of a Metropolitan Area's Price of Housing on Child and Young Adult Outcomes

Abstract

There have been unprecedented swings in the real price of owner-occupied housing in the past two decades. These price changes may have affected household wellbeing in a number of ways, including through their effects on child development. However, there has been little research on the impact of the price of housing on child development, and no research on the longer run effects of the variations in the price of housing experienced during childhood. We merge longitudinal data on child and young adult outcomes with information on local house prices and market rents, and analyze both the short and long term effects of the price of housing experienced during childhood. The results indicate that the variations in a metropolitan area’s price of owner-occupied housing has a small negative effect on children’s mathematical achievement, but no consistent impact on reading achievement, behavior problems, or a child’s body-mass index. A higher average price of housing experienced during childhood has a negative effect on the wage rate of young adults, consistent with the negative effect on childhood mathematical achievement. However, the main finding is that the fluctuations in the price of housing in the past two decades have little impact on children.