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Working Paper Number SEHSD-WP2018-14
D. Augustus Anderson, John Hisnanick, Hye-Sung Han
Component ID: #ti2005340916


The purchase of a home is the largest investment made by most American families, and home equity is the largest component of family wealth. Homeownership, an essential part of the “American Dream,” has not only been a financial goal for many American families but is also central to U.S. housing policy. Scholars have long documented the social and economic merits of homeownership and explored the factors that influence access to it. However, despite the abundance of literature on homeownership and housing tenure choice, there lacks a study that focuses on whether and how debt and wealth influences a household’s decision to own or rent a home. This paper explores the effect of household debt and wealth on subsequent tenure choice. Using 2004 and 2008 panel data from the Survey of Income and Program Participation (SIPP), this study attempts to identify the causal effect of household debt and wealth on household’s decision to change tenure choice by examining what factors influenced transition from homeowner to renter or from renter to homeowner. Data analysis shows that household secured debt, household wealth, and household income play a significant role in household’s change in tenure choice – owners becoming renters and renters becoming homeowners.

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