Wealth Accumulation and Home Ownership of US young adults: 2005-2009

Santos, Cristina (2012). Wealth Accumulation and Home Ownership of US young adults: 2005-2009. FINNOV.


This paper describes how home ownership decisions of US American young adults may have changed with the financial crisis of 2008. It uses the NLSY97, a panel data set which follows individuals from their childhood until their early adulthood. It asks individuals who have turned 25 years of age what their assets, earnings and home situation are. By looking at how these answers differ over time, and between home owners and renters, we assess how the 2008 crisis has impacted on the differences between home owners and renters. Results suggest that the earnings distribution of renters remained more or less constant throughout the period, in nominal prices, while the divide between earnings of buyers and renters increased. At the same time, rental costs have increased, which suggests that the inequality between these two groups may have increased.
Renters also seem to have become more risk takers and try to compensate by having larger than usual risky assets in their portfolios.

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