Urbanity, Financial Crisis and the Timing of Homebuying Decisions by Young Households

Large urban areas have a high appeal to young households, particularly highly educated ones, as they offer higher wages, more job opportunities and urban amenities. However, large urban areas are also characterized by higher rental rates and single-family home prices. We investigate the timing of ho...

Full description

Saved in:
Bibliographic Details
Published inThe journal of real estate finance and economics Vol. 62; no. 4; pp. 481 - 507
Main Authors Kim, Dongshin, Seo, Youngme, Freybote, Julia
Format Journal Article
LanguageEnglish
Published New York Springer US 01.05.2021
Springer Nature B.V
Subjects
Economic conditions
Economic crisis
Economics
Economics and Finance
Financial Services
Home ownership
Households
Job opportunities
Mobility
Prices
Race
Regional/Spatial Science
Timing
Urban areas
Wealth
Young adults
R21
Urban
R31
Homeownership
O18
First-time homebuyers
Intertemporal dynamics
Cox regression
Online AccessGet full text

Cover

More Information
Summary:Large urban areas have a high appeal to young households, particularly highly educated ones, as they offer higher wages, more job opportunities and urban amenities. However, large urban areas are also characterized by higher rental rates and single-family home prices. We investigate the timing of homebuying decisions by young households (25 to 28 years) in large metropolitan (metro) areas compared to young households in other areas. Using the PSID database and Cox regression, we find that wealth, likelihood to move, being married, race and macro-economic variables affect the timing of homebuying decisions of young households irrespective of where they live. However, income is more important for the timing of homebuying decisions by young households in large metro areas than other areas and a college education is less important. Furthermore, large metro households are more likely to delay homeownership than households in other areas. In poor economic conditions such as the 2007 to 2009 financial crisis, mobility considerations are predominantly driving the timing of homebuying decisions by large metro households while income is most important for homebuying decisions of young households in other areas. Our results suggest that young homebuyers in large metro areas differ from those in other areas and that urbanity is important in understanding homebuyer behavior.
ISSN:0895-5638
1573-045X
DOI:10.1007/s11146-020-09759-4