In a Bewley model with endogenous price volatility, home ownership and mobility across locations and jobs, we assess the contribution of financial constraints, housing illiquidities and house price risk to home ownership over the life cycle. The model can explain the rise in home ownership and fall in mobility over the life cycle. While some households rent due to borrowing constraints in the mortgage market, factors that affect propensities to save and move, such as risky house values and transactions costs, are equally important determinants of the ownership rate.
Authors
Research Associate Texas A&M University
Jonathan is a Researcher Associate of the IFS and an Assistant Professor of Finance at Mays Business School, Texas A&M University.
Santhanagopalan Vasudev
Journal article details
- Publisher
- Review of Economic Dynamics
- JEL
- C62. E21, J61, R21
- Issue
- July 2013
Suggested citation
Halket, J and Vasudev, S. (2013). 'Saving up or settling down: home ownership over the life cycle' (2013)
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