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Leverage and Elderly Homeowners’ Decisions to Downsize

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  • Xun Bian

Abstract

We study the effect of financial leverage, measured using the loan-to-value (LTV) ratios, on elderly homeowners’ decisions to downsize. Using a 1999--2011 sample of elderly homeowners from the Panel Study of Income Dynamics, we find that a higher LTV ratio increases the propensity to downsize. Elderly homeowners with higher LTV ratios are more likely to move into properties with fewer rooms, to move from single-family properties into multifamily properties, and to move into less expensive homes. Our point estimates suggest that on average, a 10 per cent increase in the LTV ratio is associated with a 7.7--9.7 per cent increase in the probability to downsize.

Suggested Citation

  • Xun Bian, 2016. "Leverage and Elderly Homeowners’ Decisions to Downsize," Housing Studies, Taylor & Francis Journals, vol. 31(1), pages 20-41, January.
  • Handle: RePEc:taf:chosxx:v:31:y:2016:i:1:p:20-41
    DOI: 10.1080/02673037.2015.1024203
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    1. Steven F. Venti & David A. Wise, 1989. "Aging, Moving, and Housing Wealth," NBER Chapters, in: The Economics of Aging, pages 9-54, National Bureau of Economic Research, Inc.
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    1. Ivis García, 2024. "Understanding the Housing Preferences of Older Adults: Insights from a Study on Micro-Housing in Salt Lake City, U.S," Land, MDPI, vol. 13(2), pages 1-20, February.

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