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Equity in housing is a major component of household wealth in the United States. Steady gains in housing prices over the last several decades have generated large potential gains in household wealth among homeowners. Mankiw and Weil (1989) and McFadden (1993b) have argued that the aging of the US population is likely to induce substantial declines in housing prices, resulting in capital losses for future elderly generations. However, if households can anticipate changes in housing prices, and if they adjust their non-housing savings accordingly, then welfare losses in retirement could be mitigated. This paper focuses on two questions: (1) Are housing prices forecastable from current information on demographics and housing prices?; and (2) How are household savings decisions affected by capital gains in housing? We use metropolitan statistical area (MSA) level data on housing prices and demographic trends during the 1980's and find mixed evidence on the forecastability of housing prices. Further, we use data on five-year savings rates from the Panel Study of Income Dynamics and find no evidence that households engage in changing their non-housing savings in response to expectations about capital gains in housing. Thus, the projected decline in housing prices could result in large welfare losses to current homeowners and large intergenerational equity differences
Equity in housing is a major component of household wealth in the United States. Steady gains in housing prices over the last several decades have generated large potential gains in household wealth among homeowners. Mankiw and Weil (1989) and McFadden (1993b) have argued that the aging of the US population is likely to induce substantial declines in housing prices, resulting in capital losses for future elderly generations. However, if households can anticipate changes in housing prices, and if they adjust their non-housing savings accordingly, then welfare losses in retirement could be mitigated. This paper focuses on two questions: (1) Are housing prices forecastable from current information on demographics and housing prices?; and (2) How are household savings decisions affected by capital gains in housing? We use metropolitan statistical area (MSA) level data on housing prices and demographic trends during the 1980's and find mixed evidence on the forecastability of housing prices. Further, we use data on five-year savings rates from the Panel Study of Income Dynamics and find no evidence that households engage in changing their non-housing savings in response to expectations about capital gains in housing. Thus, the projected decline in housing prices could result in large welfare losses to current homeowners and large intergenerational equity differences.
The aim of the research in Wealth Flight is to provide insight into the social association and economic variables that relate to the disparity affecting low-income communities. These communities rarely begin as a low-income environment, but when they are described as such, they are often considered small communities. This book focuses on working-class communities that at one time were thriving towns, but due to socioeconomic change, are presently considered low-income or disadvantaged. The intent is to bring attention to the factors that have created this shift, and how these change points can be remedied to help these towns, cities, and their educational systems. Author Dr. Monica D. Shepherd does not simply focus on the problem and in turn report on poverty, but rather advocates for proposed changes that can benefit residents. The goal is to explain the concerns and suggest solutions. Although not all applications are feasible, a significant number of the findings are achievable. Dr. Shepherd explains how the housing market is a predictor for community change. "What inspired me most was that past literature on this topic addressed components solely associated with economic, psychological, or racial discrimination as a catalyst for a community downturn. Although these components are independently important, this book intentionally combined the changes that can serve as a reasonable intersecting variable for reasons why stewards of place would benefit low-income communities." (About the Author) An Illinois native, University Professor Monica D. Shepherd, Ph.D., is a mix methods research methodologist and historian. Dr. Shepherd specializes in urban history with a focus on economics, systems theory, public and educational policy. Dr. Shepherd's major research also includes data analysis, econometrics models, system dynamics, prediction synthesis, case studies, community demographics trends, and investigating pathologies.
This volume takes into account the difficulties created by the US census data being published in two separate categories: population and housing. It aims to give cross disciplinary investigations of population and housing an identity and a common name: housing demography. Essays commissioned especially for the volume address four main issues: household formation and composition; housing choices; housing construction and inventory change; and spatial patterns and consequences.
"Current estimates of housing wealth effects vary widely. We consider the role of omitted variables suggested by economic theory that have been absent in a number of prior studies. Our estimates take into account age composition and wealth distribution (using poverty rates as a proxy), as well as wealth shares (how much of total wealth is comprised of housing vs. stock wealth). We exploit cross-state variation in housing, stock wealth and other variables in a newly assembled panel data set and find that the impact of housing on consumer spending depends crucially on age composition, poverty rates, and the housing wealth share. In particular, young people who are more likely to be credit-constrained, and older homeowners, likely to be "trading down" on their housing stock, experience the largest housing wealth effects, as suggested by theory. Also, as suggested by theory, housing wealth effects are higher in state-years with higher housing wealth shares, and in state-years with higher poverty rates (likely reflecting the greater importance of credit constraints for those observations). Taking these various factors into account implies huge variation over time and across states in the size of housing wealth effects"--National Bureau of Economic Research web site
Due to falling fertility rates, the aging of the baby-boom cohort, and increases in life expectancy, the percentage of the population that is elderly is expected to increase rapidly in the United States and Japan over the next two decades. These fourteen essays show that, despite differences in culture and social and government structure, population aging will have many similar macro and micro effects on the economic status and behavior of the elderly in both countries. The most obvious effects will be on social programs such as public pension systems and the provision for medical needs of the elderly. But, the contributors demonstrate, aging will also affect markets for labor, capital, housing, and health care services. It will affect firms through their participation in the demand side of the labor market and through their provisions for pensions. And aging will influence saving rates, the rate of return on assets, the balance of payments, and, most likely, economic growth. This volume will interest scholars and policy makers concerned with the economics of aging.
Demographic forces will reshape the market for new housing during the remainder of this century. In particular, the amount of needed new housing will be stimulated by the maturation of the large "baby boom" generation; the financial capacity to afford new housing will be strengthened by the predominance of two-earner couples; the type of preferred housing will reflect evolving residential needs dictated by diverse living arrangements; and housing demand will tend to be concentrated within certain regions and metropolitan areas.