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Title: House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby
Citation Type: Conference Paper
Publication Year: 2012
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Abstract: This project investigates how changes in Metropolitan Statistical Area (MSA)-level housing prices affect household fertility decisions. Recognizing that housing is amajor cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in real estate prices will have a negative price effecton current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child.On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Controlling forMSA fixed effects, trends, and time-varying conditions, our analysis finds that indeed, short-term increases in house prices lead to a decline in births among non-owners anda net increase among owners. Our estimates suggest that a $10,000 increase in house prices leads to a 2.1 percent increase in births among home owners, and a 0.4 percentdecrease among non-owners. At the mean U.S. home ownership rate, our estimates imply that the net effect of a $10,000 increase in house prices is a 0.8 percent increase in births. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. Our paper providesevidence that homeowners use some of their increased housing wealth, coming from increases in local area house prices, to fund their childbearing goals. In addition, wefind that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates.
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Authors: Dettling, Lisa J.; Kearney, Melissa S.
Conference Name: Population Association of America
Publisher Location: San Francisco, CA
Data Collections: IPUMS USA
Topics: Fertility and Mortality, Housing and Segregation
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