The Boom, the Bust, and the Future of Homeownership

Abstract

This paper investigates the boom and bust in U.S. homeownership rates over the 2000-2010 period. Using individual-level census data, we first estimate 204 homeownership regressions stratified by household age (21, 22,…, 89) and survey year (2000, 2005, and 2009). Shift-share methods confirm that changes in the model coefficients that reflect household attitudes, lending standards, and other market conditions – but not population socioeconomics – were the primary driver of the boom and bust in homeownership over the decade. This pattern holds for nearly all age groups and is more pronounced for recent movers. Results also suggest that homeownership rates may have come close to bottoming out in early 2013 at 65 percent after falling roughly 4 percentage points from their peak in 2006. This suggests little lasting effect of the grand homeownership policy experiment of recent decades.

Keywords: Homeownership, Credit Conditions, Housing Markets