Homeownership Decisions in the Bust

We study the transition in and out of homeownership during the 2008 housing market bust, using detailed micro-level data covering the entire Danish population. We document that homeownership decisions for certain groups of households are cyclical. Households which are affected more by falling house prices reduced their likelihood of acquiring a home during the bust more than other households. These households are characterized by lower levels of net worth, lower income, less education, are singles, and younger. Combined with younger households abandoning homeownership more during the bust, the bust contributed to a significant inter-generational shift in homeownership from younger to older households.