American Dream Delayed: Shifting Determinants of Homeownership

We develop and estimate a dynamic model of female labor supply, fertility and transition from renting to first homeownership with panel data, to investigate declining U.S. homeownership over the past decades. Higher house prices and increased female wage rates (that is the opportunity cost of leisure), cause households to postpone their first-home purchase, because leisure and fertility are complementary to homeownership. Education and female workforce participation are reinforcing factors that raise the value of owning a home. Our estimates show the effects of rising house prices and wage rates more than offset the effects of greater education and workforce participation