Homeownership Attainment Research Articles

Influence of a Mortgage Interest Deduction on Homeownership Attainment of European Households

This article provides new European evidence about the relation between the much discussed mortgage interest deduction (MID) and homeownership. We also examine which household-group, based on income or marital status, is (mainly) encouraged via this fiscal relief to own a home. To do so, we estimate multilevel mixed-effects logistic regressions by using Eurostat EU-statistics on income and living conditions data in twelve countries over 2003-2018. Our quantitative study shows that an MID generally fails to advance its purpose of promoting homeownership, likely due to price capitalization. However, our results underscore that there is (substantial) variation across household groups. From the odds ratios, we conclude that the intended positive effect of an MID on homeownership probability occurs only for the highest-income households; those who need the most help with good-quality affordable housing are the most discouraged via this relief to become a homeowner. Since the continuation of an MID remains one of the contested issues in many national debates, our empirical findings provide useful insights for governments around the world that wish to promote homeownership through tax incentives.

Young Households’ Diminishing Access to Homeownership Attainment in Europe

This multi-country article focuses particularly on homeownership among the young. After all, relying on European Union Statistics on Income and Living Conditions (EU-SILC) data in twelve European countries, we can see that in contrast to the aggregate homeownership rate of ‘all’ households (i.e., no matter what age the households’ heads are) that has remained relatively stable, the aggregate homeownership rate of young households (with heads aged 0–35 years) has fallen substantially in Europe in recent decades. Multiple analyses and quantitative comparisons confirm the stylized fact that acquiring a home has indeed become a challenge for young adult households (also no matter the income quartile in which they fall); rather than that, however, their lowering homeownership rates are simply due to changing sociodemographic characteristics (such as having children later in life and staying longer in education). Moreover, it is unveiled that young tenants and lower income young households are especially disadvantaged with regard to access to the housing market. Through our actual research, we aim to answer the question: Has the government’s fiscal policy strengthened or weakened the declining trend in young people’s homeownership? After all, some evidence exists of an MID having a perverse effect, i.e., capitalizing on higher housing prices. However, multilevel mixed-effects logistic regressions reveal that the use of a mortgage interest deduction (MID) has had a significant positive effect on young adults’ homeownership probability—with the strongest effect for the highest incomes. We believe that all the above results are—in the first place—relevant for governments that are willing to stimulate homeownership. They indicate that some (additional) policy interventions are indeed needed, next to or instead of granting an MID, and that the focus of housing policy should also (and more) be on tenants and those with lower incomes.

The Relationship between Generational Cohorts and Homeownership Attainment: An Analysis of the Implications for the Aspirations of Younger Demographic Groups

The Relationship between Generational Cohorts and Homeownership Attainment: An Analysis of the Implications for the Aspirations of Younger Demographic Groups

Job and home dilemma: housing pathways of urban migrants in China

ABSTRACT China’s rapid industrialization and urbanization have been accompanied by massive internal population migration over the past decades. These immigrants experience various housing disadvantages along their migration journeys. Using longitudinal survey datasets from China Family Panel Studies, this paper identifies the housing pathways adopted by the Chinese urban migrants, including moving into homeownership, moving out of homeownership, and non-homeownership mobility. Job changes and institutional forces are the most significant mobility triggers, while family life cycle events are vital predictors of moving into homeownership. The dilemma of job-induced migration versus family-centred homeownership attainment has resulted in various social issues. This paper suggests that policies should be systematically designed for industry convergence from an overall urban planning perspective to promote township urbanization, including industrial relocation, rural economic revitalization, and institutional reforms of rural-urban disparities.

Brick-by-brick inequality. Homeownership in Italy, employment instability and wealth transmission.

This paper investigates changes between, and inequalities within, birth-cohorts in Italy, surrounding homeownership. Italy is a homeownership and familialistic society, where in recent decades an increasing 'generational divide' in employment prospects has opened up, as a side-effect of a partial and targeted labour market deregulation. Drawing on the interplay of macro-level constraints with micro-level factors, we discuss patterns of inequality in attaining homeownership between cohorts, arising from greater instability of employment for young adults, and within cohorts, stemming from class-based patterns of intergenerational wealth transmission. Our analytical strategy combines a sequential cohort design with two levels of analysis that simultaneously consider young people around the normative age of housing independence and wealth transmission from their families triggered by their leaving the nest. Longitudinal analyses apply random-effects probit models and linear probability distributed fixed-effects to panel data from the Bank of Italy (SHIW 1989-2016). Results show a decrease in homeownership attainment across cohorts, which can be partially ascribed to employment disadvantages faced by younger cohorts. On top of this, class-specific patterns of intergenerational transmission are in place: lower classes rely on timely housing wealth transfers, whereas upper classes are prepared to provide their children with an extended stream of financial transfers.

Homeownership attainment of adult children in urban China: parental attributes and financial support

Soaring homeownership and housing prices have made it more difficult for newcomers to climb the housing ladder without parental support. This study relies on China Household Finance Survey microdata in 2015 to examine the role of parental attributes (PA) and financial support on adult children’s homeownership attainment. Results show that, after controlling for covariates, parental lending for housing would triple the adult children’s odds of homeownership. Parental financial support plays a marginal role in maintaining homeownership. Adult children are more likely to transfer income to their parents than to receive, which is detrimental to the adult children’s homeownership. The relative importance of PA is secondary to that of parental support and the adult children’s institutional attributes—hukou status and access to housing provident fund. While the housing market is maturing, some advantages embedded in the socialist institutional arrangements have persisted. Young adults and rural migrants, who are burdened by financially supporting their parents, will struggle more in their housing careers.

Complexities in Homeownership: An Exploration of Socio-Religious and Gender Dimensions

Housing literature across the globe is replete with the evidence of gender disparity in homeownership. The cause of this disparity has been associated with a variety of factors including economic, social, political and legal considerations. While these factors have formed the basis for analysing women’s disadvantaged position in homeownership attainment, little is known about the phenomenon in the Ghanaian context. This study uses in-depth interviews to explore the gender disparities in the ownership of housing assets. The findings suggest that social norms encourage male family headship, which is accompanied by the responsibility of providing the essential needs of the family such as a home. This leads to greater homeownership ambitions for men and as well promote the practice where wives allow their husbands to take credit for homes built with financial resources of the former. Religious norms and tenets also condone male family headship, requiring men to be providers of dwellings for their nuclear families.

Positionality of women in homeownership: a process of gender contract negotiation

Literature is replete with information indicating that the roles, status and positions of men and women in society have evolved significantly over the years. Yet, there is a little understanding of how such changes have occurred in homeownership attainment in developing countries where there is male dominance. Using Ghana as a case study, this study explores the evolution of women’s role in homeownership. Findings show that although men exercise greater control in terms of investment and ownership, gender contract renegotiations often lead to an increase in women’s participation in homeownership mainly in supportive capacities. Renegotiations have mostly occurred to demystify the normative ideology tying men with the sole responsibility of housing investments. As a consequence, there is evidence of women making financial contributions, supervising construction activities and exploring cost-saving measures to aid the process of family house construction. Generally, findings show that homeownership enhances reproductive roles, uplifts status of men and acknowledges the contributions of women. Similarly, new norms of inheritance supported by statutory and customary law offer ownership stakes to women. In view of this benefit, women tend to be motivated towards providing support for the attainment of family homeownership.

Connecting religion to homeownership: exploring local perspectives in Ghana

In developed and emerging economies, religion is becoming popular as potentially influencing the achievement of homeownership aspirations. Yet, the understanding of the connection between religion and homeownership in the context of developing countries is far limited. The purpose of this study is to fill this conceptual gap by identifying the patterns of religious influences on homeownership in the Ghanaian context where deeper meanings are associated with religious beliefs and practices. The findings show homeownership is perceived as physical evidence of the blessings of God or being attained as the will of Allah. However, its attainment is shaped by certain religious directives pertaining to both family and social life. Also, homeownership enhances religious practices while rental status is seen to stifle the performance of certain religious practices. In that way, religious considerations are made in the pursuance of the transition from rental status to homeownership. These findings offer two major contributions. First, this study is the first study in the context of developing countries particularly Africa to explore how religiosity shape homeownership attainment. Secondly, it also offers practical policy implications for homeownership in developing countries.

Order and Timing of Home Ownership and Fertility Decisions in Australia

The birth of a child and transition into home ownership are markers of progression along a life course. Research shows that pathways to home ownership have become more diverse and deviate from the traditional pathway which was characterised by marriage followed by the birth of a child before entering home ownership. This study investigates the timing and order of the two interrelated events of birth of a child and the transition to home ownership in Australia. Using the Household, Income and Labour Dynamics in Australia panel survey, we apply a multi-process event history analysis for describing the timing of each event following the formation of a cohabiting relationship. The results suggest that the likelihood of birth increases with prior home ownership attainment but as time passes following the purchase of a home, the likelihood of birth decreases, similarly, the likelihood of home ownership attainment decreased with time following birth.

Simulating the Change in Young Adult Homeownership Through 2035: Effects of Growing Diversity and Rising Educational Attainment

In this article we highlight the scope of public policy and demographic change for the future path of homeownership. In so doing, we review the literature on the scope of impact of certain policy tools, estimate housing tenure choice models that highlight how sensitive households are to various factors in different time periods to highlight how credit conditions can influence the future path of homeownership, and then simulate the future paths of homeownership in light of prospective changes in young-adult race/ethnicity, education, income, and wealth. The study focuses on prospective changes between 2015 and 2035 to the rate of homeownership among young adults age 25 to 44, prime ages for first-time homebuying. We find that rising education levels—even if minority-white college education gaps were eliminated completely—would only partially reverse the steep declines in young-adult homeownership attainment witnessed since the onset of the housing bust. However, our findings also suggest that the common narrative, which predicts that young-adult homeownership rates will inevitably decline due to increasing racial/ethnic diversity, does not take into account the positive effect of rising educational attainment among minorities on homeownership rates.

Residential mobility and neighborhood inequality during the transition to adulthood

ABSTRACTThere is ongoing interest on the outcomes of residential mobility during the young adulthood. In this paper, we examine movement in and out of disadvantaged and advantaged neighborhoods as individuals move out of the family home and experience significant life course events. Using longitudinal data on young adults in the United States from the National Longitudinal Study of Adolescent to Adult Health, we find that while the point-in-time measure of the neighborhood poverty gap (the difference between the most and least advantaged neighborhoods) remained nearly identical from adolescence to young adulthood. But the neighborhood poverty gap between individuals starting out in the least and most disadvantaged residential settings decreased by 18.2 percentage points. In other words, cross sectional estimates of the poverty gap do not capture the dynamism of changes in poverty with young adult transitions. Partner formation, home ownership, and educational attainment are important life course transitions associated with significant moves up and down the neighborhood poverty distribution.

Rural migrants' homeownership in Chinese urban destinations: Do institutional arrangements still matter after Hukou reform?

In China, the hukou system has long been cited as the underlying cause of the disadvantages in housing access that rural migrants encounter in urban destinations. However, following the latest round of hukou reform, does the hukou system still have a significant impact on rural migrants' housing outcomes? This paper addresses the question by examining hukou-related arrangements faced by rural migrants, in both their urban destination and their rural town of origin. Based on data from a nationwide survey conducted in 2011, we find that city entry criteria together with insecure and inalienable land rights negatively predict rural migrants' homeownership attainment. Moreover, the impact differs across urban locations. Consequently, although hukou reform has eased discrimination against rural individuals, disparities persist between urban natives and rural migrants. This paper demonstrates that these disparities result from unequal access to social welfare and housing.

Why Buy a Home? Race, Ethnicity, and Homeownership Preferences in the United States

There are many reasons why Americans prefer homeownership to renting. Owning a home can serve as a vehicle for economic mobility or a marker of status attainment. Homeownership may deepen feelings of ontological security and enable families to move into more convenient neighborhoods. While previous research on race, ethnicity, and housing focuses on homeownership attainment, identifying structural barriers to explain persistent racial disparities, there has been little investigation of the reasons why Americans prefer to own their own homes. Drawing on the National Housing Survey, a nationally representative survey of American adults, I ask how these reasons vary by race and ethnicity. I report that African Americans and Latinos are more likely than whites to identify the social status of ownership and the importance of building wealth as reasons to buy a home. While African Americans are also more likely to pursue homeownership as a way to improve their housing quality, they are less likely to view ownership as a tool for accessing more convenient neighborhoods. As a contribution to research on racial stratification in homeownership, my findings push beyond existing studies of revealed preferences to explain why buying a home endures as such an important goal for many Americans. African Americans and Latinos are more deeply invested in the social status of homeownership, the importance of building wealth, and the promise of moving into a nicer home when they pursue ownership opportunities.

Housing Policies in the United Kingdom, Switzerland, and the United States: Lessons Learned

We provide an analysis of the housing market and current housing policies in three developed countries: the United Kingdom (UK), Switzerland, and the United States (US). We focus on these three countries mainly due to the marked differences in their institutional settings. The UK is characterized by fiscal centralization and an extraordinarily rigid planning system. The consequences of this setting, which make housing supply extremely unresponsive to changes in house prices, are a high degree of urban containment, a severe housing affordability crisis, and a housing shortage, particularly for the young. The key UK policy, Help-to-Buy, which focuses on stimulating housing demand, fails to address the affordability crisis, because increasing demand only pushes up house prices further without expanding housing supply. Fiscal decentralization and a lax zoning system, both encouraging residential development and an extraordinarily low homeownership rate explain why Switzerland’s main political concerns are sprawl and rent stabilization. The country’s key policies aim to tackle these two concerns but they themselves have some important unintended consequences. The US is characterized by fiscal federalism and an enormous variation in the tightness of land use restrictiveness across metropolitan areas. The key policy concern across the country is homeownership attainment and the key policy to tackle this issue is the Mortgage Interest Deduction (MID). This policy backfires in prosperous and tightly land use regulated metropolitan areas — “superstar cities” — because in these places the policy-induced demand increase mainly pushes up house prices. The MID only increases homeownership attainment of higher-income households in metropolitan areas with lax land use regulation. The net effect of the policy on homeownership attainment across the country is essentially zero. We conclude that the assessment of housing policies crucially depends on the fiscal and regulatory environment in local housing markets. Policies that stimulate housing demand such as the MID or Help-to-Buy are doomed to fail in markets with tight regulation or otherwise tight supply.

The Mortgage Interest Deduction and its Impact on Homeownership Decisions

Abstract This paper examines the impact of the combined U.S. state and federal mortgage interest deduction (MID) on homeownership attainment, using data from 1984 to 2007 and exploiting variation in the subsidy arising from changes in the MID within and across states over time. We test whether capitalization of the MID into house prices offsets the positive effect on homeownership. We find that the MID boosts homeownership attainment only of higher-income households in less tightly regulated housing markets. In more restrictive places, an adverse effect exists. The MID is an ineffective policy to promote homeownership and improve social welfare.

Structural Evaluation of Institutional Bias in China's Urban Housing: The Case of Guangzhou

Institutional bias is an important topic in social justice and the presence of institutional bias is widely recognized in China's urban housing sector. This paper proposes a new framework for measuring and assessing institutional bias in China's urban housing system based on structural equation modeling and the Pratt index of relative importance for linear regression. The proposed framework analyzes the structural pathways through which nonmarket institutional forces affect housing, and provides quantitative measures to evaluate both the direct and the indirect effects of biased institutions on housing outcomes. A case study of Guangzhou is presented to demonstrate the proposed ideas and methods using first-hand household survey data collected in 2009. The results of the case study show the dominance of institutional effects over market effects on housing outcomes through direct and indirect pathways. The results also show that, although institutional forces affect most subjective and objective measures of housing outcomes, they induce the largest effects on homeownership attainment and physical housing conditions. This suggests that, at this stage, property ownership and material housing well-being are two potential central areas of China's housing justice.

International Migration, Housing Demand and Access to Homeownership in the UK

Since the mid 1980s, the UK has experienced a prolonged period of net international migration with debate as to its impact on economic benefits and costs. A third of projected new households in the next 15–20 years are expected to come from net migration. This article examines international migration and housing demand in light of the conventional understanding of British housing markets and the extent to which there are differences in demand and access to homeownership across international migrant groups. Demographic and socioeconomic factors as well as length of residence are found to be significant determinants of homeownership. However, there are also differences in homeownership attainment that may be related to ethno-cultural differences or unobserved wealth effects and mortgage market institutional factors. The role of socioeconomic factors has implications for skills-based migration to the UK if a policy concern is house price pressure and migration.

Mobility, Residential Location and the American Dream: The Intrametropolitan Geography of Minority Homeownership

This article applies data from Washington, DC, Chicago and Los Angeles to estimate three‐level nested multinomial logit models of household mobility, residential location and homeownership tenure choice. Model simulation indicates that shocks to income can significantly elevate the homeownership attainment of minority households; however, their urban settlement and homeownership patterns remain substantially more concentrated than those of whites. Simulated equilibration of black economic status with that of whites results in an approximate doubling of homeownership rates among black movers to central city areas. In contrast, homeownership rates among black movers to suburban and outlying areas lag far behind those of whites.

THE CHANGING CONTEXT OF YOUNG PEOPLE'S HOUSING OPPORTUNITIES

Since the middle of the 1990s, young people have been experiencing unprecedented difficulty in obtaining stable employment, in forming an independent family and in climbing up the ladder of housing. This paper looks at the housing condition of the young generation. The housing system in post-war Japan has assumed that the majority of people lead a standardized life-course. However, the paper demonstrates the fact that while young households with a conventional life-course pattern ascend up the housing ladder towards home ownership attainment, single people and those living in their parental home are largely excluded from the ladder system.