How do Housing Price Booms and Busts Affect Home Ownership for Different Birth Cohorts?

• Over the past 40 years there have been considerable differences in the rates at which different birth cohorts (groups of individuals born in the same calendar year) have entered the housing market. Ownership rates at age thirty have ranged from around fifty per cent to approximately seventy per cent. • This variation is related to house price developments over time, although that relationship seems stronger before 1990 than since. Overall, our results suggest that when a birth cohort faces house prices that are 17 percentage points (1 standard deviation) above trend in early adulthood, then the home-ownership rate of that birth cohort at age thirty is approximately 1.5 percentage points lower. • There is strong negative correlation between ownership rates at age thirty and subsequent growth in ownership: birth cohorts that have low ownership at thirty appear to have fast growth in home ownership subsequently. Historically, cohorts with low home-ownership rates at thirty have closed about 80 per cent of the “ownership-gap” by the time they reach age forty.