He tries to explain the increase in the homeownership rate over the 90s and 00s. He finds:
Demographics don't
Income and wealth don't
Interest rates don't
Local house prices don't
National house prices do!
We finds that when the moving average of national house prices rises, the propensity to own goes up. While one would think tat only local house prices are relevant, they do not have explanatory power for tenure choice--only national house prices have such power. Perhaps the frenzy was driven by national media reporting. I look forward to seeing Don's paper.
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haven't seen the paper - I'm in frigid Washington, not somewhat less frigid Atlanta. But wouldn't national house prices and increases in home ownership both be driven by the relaxation/tightening of lending standards?
Correlation does not prove cause and effect. That is, you cannot just increase prices more if the goal is to increase homeownership rates more in the future.
The current mortgage credit crises, and taxpayer bailouts of Fannie/Freddie show the problematical nature of this line of reasoning.
It is very interestingly written, to the author thanks.
We finds that when the moving average of national house prices rises, the propensity to own goes up. While one would think tat only local house prices are relevant, they do not have explanatory power for tenure choice--only national house prices have such power. Perhaps the frenzy was driven by national media reporting. I look forward to seeing Don's paper.
aven't seen the paper - I'm in frigid Washington, not somewhat less frigid Atlanta. But wouldn't national house prices and increases in home ownership both be driven by the relaxation/tightening of lending standard
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if the goal is to increase homeownership rates more in the future.
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