David Genesove Comment on Hone Ownership and Social Mobility

Discussion of “Home Ownership and Social Mobility� by Blanden and Machin David Genesove Hebrew University of Jerusalem and CEPR

Chambers, Garriga and Schalgenhauf (2014)

Fetter (2013, 2014)

Ortalo Magne and Rady (1999), citing Simons:

Age/Year 1983

1988

1993

20-29

46.1

60.5

50.1

30-39

71.8

71.9

68.8

• Ortalo Magne and Rady (2006) – starter homes and credit constraints • Sinai and Souleles – ownership as a hedge against rent risk • Amior and Halket, 2014 – test of S&S

Owners versus Owner-Occupants

Marker, Mechanism or Object of Interest?

• “housing as marker of wealth” • Markers need to be stable • Marginal distribution unstable; • home ownership conditional on wealth (or rank of wealth) unstable?

• Intergenerational transmission of the marker does not imply IT of object (even conditional on income, etc.)

• Taste • Geographical Difference

• Mechanism: “rising housing values  [home owner] parents … able to offer direct financial support for home purchase.”

• Mechanism: financial accumulation due to saving of rental costs • Mortgages

• where

Lived in owner-occupied home as child

0

0

.01

.01

Fraction .02

Fraction .02

.03

.03

.04

.04

Did not live in owner-occupied home as child

-6

-4

-2

c

0

2

4

-5

0

c

5

Some explanations for changes in marginal distribution • Delayed adolescence • Urbanization • Mortgage interest tax deductibility • Introduced 1969 • Made somewhat more attractive in 1983, somewhat less in 1988 • Eliminated (for new borrowers?) in 2000

• Mortgage market liberalization in 1980s • Reduction of social housing