INVESTMENT RISK AND THE TRANSITION INTO HOMEOWNERSHIP
This paper investigates the extent to which house–price uncertainty affects the transition of renter households into homeownership. Using a 14-year household panel from the Panel Study of Income Dynamics during the years 1984–1997 and measures of the time-varying risk and return to owner-occupied housing, we estimate a Cox proportional hazard model of the effect of house–price volatility on the transition into homeownership. Results indicate that house–price uncertainty has a negative and dramatic impact on transitions into homeownership. In addition, we find that the low-wealth renters are particularly sensitive to house–price risk.
Document Type: Research Article
Affiliations: 1: Kansas State University, Department of Economics, 315 Waters Hall, Manhattan, KS 66506-4001, Email: [email protected] 2: Kansas State University, Department of Economics, 327 Waters Hall, Manhattan, KS 66506-4001, Email: [email protected]
Publication date: 2007-05-01