Does Investment Risk Affect the Housing Decisions of Families? |
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Authors: | Tracy M Turner |
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Institution: | Turner;: Assistant Professor, Department of Economics, Kansas State University, Manhattan, KS 66506. Phone 1–785–532–4583, Fax 1–785–532–6919, E-mail |
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Abstract: | Households assume substantial house-price risk when purchasing a home. This article investigates the effect of such risk on families' housing decisions. Using a repeat cross-section of household data from the American Housing Survey spanning a 10-year period and measures of expected return and time-varying risk, I find that families are less likely to own and housing demand is reduced during episodes of relatively high, anticipated house-price volatility. The impact is greater on low- and moderate-income families and first-time homeowners than other groups. The results hold implications for policies designed to assist homeowners in lessening the risk they bear. (JEL R21 , D12 , D84 ) |
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