American Dream Delayed: Shifting Determinants of Homeownership

This paper investigates the delay in homeownership and a subsequent reduction in homeownership rate observed over the past decades. We focus on the delay in giving birth to children and increased labor market participation as contributing factors to homeownership dynamics for prime-age female households. We formulate and estimate a dynamic life-cycle model, in which both single and married households can optimally choose homeownership, the number and timing of children and labor supply. Our theoretical model provides a detailed treatment of the economic costs and benefits associated with housing, fertility decisions and labor supply alternatives faced by the individuals over different stages of the life cycle. The delays in giving birth and buying first home arise endogenously.