Full Citation

Title: Do Households Use Homeownership To Insure

Citation Type: Miscellaneous

Publication Year: 2010

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: Are households more likely to be homeowners when housing risk is higher? Weshow that homeownership rates and loan-to-value (LTV) ratios at the city level arestrongly negatively correlated with house price levels and the variance of house pricegrowth rates in the city. But both price levels and the variance of their growth rates arethemselves correlated with the relative value of land in the city, even when land valueis instrumented for using topographic measures. We disentangle the contributions ofhigh prices from high variances by building a life-cycle model of homeownership choices.The model is able to explain much of the cross-city dispersion in homeownership andLTV. We find that higher price levels explain the lower homeownership while higherrisk explains the lower LTV in high land value cities. The variation in LTV withrisk highlights the importance of including other means of insurance in models ofhomeownership.

User Submitted?: No

Authors: Halket, Jonathan; Amior, Michael

Publisher: New York University

Data Collections: IPUMS USA

Topics: Housing and Segregation, Other

Countries: