Economic Commentary 2020-12, Federal Reserve Bank of Cleveland
Intergenerational Homeownership and Mortgage Distress
Abstract. Rates of US homeownership have declined in the past two decades, and the decline has been especially pronounced for young adults. Motivated by recent research that explores the ways in which personal experiences can affect financial attitudes and beliefs, we explore whether the negative homeownership experiences of parents during the 2008 financial crisis could have caused their children to view homeownership less favorably. We find that parental mortgage distress negatively correlates with the probability that a child will purchase a home, and we explore various channels through which this link may occur.
Keywords: homeownership, mortgage distress, intergenerational transmission, young adults, 2008 financial crisis.
In brief
Children whose parents experienced mortgage distress during the 2008 financial crisis are less likely to buy a home.
Motivated by research on how personal experiences shape financial attitudes, the commentary examines whether parents’ negative homeownership experiences in the financial crisis made their children view homeownership less favorably, and explores the channels behind the link.
Read and cite
- Read the commentary, Federal Reserve Bank of Cleveland
Fritsch, Nicholas, and Rawley Z. Heimer. 2020. “Intergenerational Homeownership and Mortgage Distress.” Economic Commentary 2020-12, Federal Reserve Bank of Cleveland.
@techreport{heimer2020intergenerational,
author = {Fritsch, Nicholas and Heimer, Rawley Z.},
title = {Intergenerational Homeownership and Mortgage Distress},
institution = {Federal Reserve Bank of Cleveland},
type = {Economic Commentary},
number = {2020-12},
year = {2020},
url = {https://www.clevelandfed.org/publications/economic-commentary/2020/ec-202012-intergenerational-homeownership-and-mortgage-distress}
}
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