INVESTMENT RISK AND THE TRANSITION INTO HOMEOWNERSHIP

Tracy M. Turner and Daigyo Seo

Journal of Regional Science, 2007, vol. 47, issue 2, 229-253

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ABSTRACT This paper investigates the extent to which house–price uncertainty affects the transition of renter households into homeownership. Using a 14-year household panel from the Panel Study of Income Dynamics during the years 1984–1997 and measures of the time-varying risk and return to owner-occupied housing, we estimate a Cox proportional hazard model of the effect of house–price volatility on the transition into homeownership. Results indicate that house–price uncertainty has a negative and dramatic impact on transitions into homeownership. In addition, we find that the low-wealth renters are particularly sensitive to house–price risk.

Date: 2007
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